Brent crude oil surges to $100 a barrel for first time since May after reports of Red Sea attacks

UK 'ready to defend itself' after Iran says bases are 'legitimate targets' - Published The British government has said it "stands ready 24/7 to defend itself" after Iran said UK bases used by the US were considered "legitimate targets". The UK has allowed the US to launch "defensive" operations from British bases hosting American personnel and aircraft, while refusing to cooperate in offensive operations against Iran.

Iran's foreign ministry said the UK was an "accomplice" in the US war, while the powerful Islamic Revolution Guards Corps (IRGC) military wing said any country which supports the US militarily "will be responsible for the consequences and repercussions".

It came after the US carried out a 12th consecutive night of strikes against targets in Iran. While US President Donald Trump has repeatedly criticised the British government and former Prime Minister Sir Keir Starmer for what he has deemed a lack of support for his war, Iran's comments on 23 July sought to paint the UK as a party to the campaign.

In March, days into the US-Israel led war, permission was given to the US for it to use British bases including RAF Fairford in Gloucestershire and Diego Garcia in the Indian Ocean to target Iranian military infrastructure used to attack Gulf countries and vessels in the Strait of Hormuz.

That policy has not been altered by new Prime Minister Andy Burnham, who was notified last week that a decision had been taken to extend the agreement with the US. In a statement published on the IRGC-linked Tasnim News Agency on 23 July, the group said American bombing missions had been launched from RAF Fairford two days earlier.

The UK Ministry of Defence has not commented on whether the base was used by the US for operations against Iran this week. Responding to the Iranian threats, a UK government spokesperson said: "Our Armed Forces are ready to keep the United Kingdom safe from any kind of attacks, whether it's on our soil or from abroad.

The UK stands ready 24/7 to defend itself. "This includes through operating a layered approach to air and missile defence, provided by Royal Navy, British Army and Royal Air Force assets equipped with a range of advanced capabilities, working closely with our Nato allies.

"The UK's approach to the conflict remains the same - we are committed to defending our people, our interests and our allies, acting in accordance with international law and not getting drawn into the wider conflict." Days after the war began on 28 February, Iran's ambassador to London, Seyed Ali Mousavi, said Iran would have the "right to self-defence" if the UK joined the war, and said it should be "very careful" about taking part.

On 19 March, Iran fired two ballistic missiles at the UK's Diego Garcia base in the Chagos Islands. One reportedly failed mid-flight, with the other shot down by a US airship. There were doubts then over whether Iran had missiles which were capable of reaching the archipelago, which is about 2,360 miles (3,600km) from Iran.

The same month, Israel claimed Iran possessed missiles that could reach up to 4,000km (2,485 miles), which would theoretically mean they could reach the UK and mainland European countries. However, then Housing Secretary Steve Reed told BBC News at the time there was "no specific assessment that the Iranians are targeting the UK - or even could if they wanted to".

Analysts have also raised doubts over the reliability and accuracy of Iran's missile arsenal, which the US says has been severely degraded by its strikes. Iran has launched strikes against several countries in the Gulf which house US military bases in recent months, while attacks against civilian vessels in the Strait of Hormuz have effectively closed the vital shipping route.

From gas to grocery aisles and back-to-school items: How higher oil prices will hit your wallet Consumers already feeling pinched since the Iran war started may feel more pain after oil prices pushed past $100 a barrel Consumers are bracing for further financial strain as global oil prices surged past $100 a barrel on Thursday, driven by renewed fighting and military strikes in the Middle East that have disrupted international oil supplies.

This latest spike follows a period of brief relief in June when hostilities between the U.S. and Iran had temporarily eased. The benchmark Brent crude, an international standard, had last reached the $100 mark in May. The current escalation means that the economic pressures felt by households since the onset of the Iran war are set to intensify.

Businesses across various sectors, including fresh food producers, school supply vendors, and shipping companies, have already reported increased operational costs from earlier energy price hikes after the U.S. and Israel attacked Iran. These rising expenses are now likely to be passed on to consumers, impacting everyday goods.

Miguel Gomez, director of Cornell University’s Food Industry Management Program, highlighted this economic reality, stating: "In general, once you have an increase in costs, businesses are fast in increasing the price." However, he noted, "it takes more time to lower prices when the costs go down.

" The sustained high oil prices are expected to continue squeezing household budgets. Here's how higher oil prices could further impact consumers' wallets. Drivers are paying more for gasoline at the pump Volatility along the Strait of Hormuz and broader regional instability pushed up the price of crude oil, the main ingredient in gasoline, and could continue to make driving costlier during the second half of summer, according to motor club AAA.

The average U.S. price for regular gasoline reached $4.09 a gallon Thursday, up 15 cents from a week ago, with drivers in most states now paying $4 or more, according to AAA. “Given the typical lag along the oil industry’s supply chain, prices at the pump are poised to keep rising at least into next week,” said Pavel Molchanov, investment strategy analyst at Raymond James.

But he noted that futures prices for oil delivered later this year and next year are lower, suggesting prices could fall once military action ends. For the most part, higher gasoline prices haven't stopped Americans from driving. Gasoline demand rose 1% to 8.

9 million barrels per day last week, according to the U.S. Energy Information Administration. Pressure on gasoline prices could persist because fewer refineries are available to process crude than before the conflict. Refineries in the Middle East have been damaged, and Ukrainian attacks have damaged refineries in Russia.

Shoppers are paying more for a bag of groceries Grocery prices generally rise with oil because farmers use diesel fuel to power equipment, while many food products are transported by trucks that require fuel. “Oil at $100 doesn’t make food prices jump right away, but it does put upward pressure across the food supply chains, especially for categories that depend heavily on trucking, cold storage and packaging,” Gomez said.

Fresh produce and dairy could feel a larger impact because they require refrigeration during delivery. Imported goods are also vulnerable to higher shipping costs, Gomez said. “Things like olive oil that we produce very little here and are coming from mostly from Europe are going to be up.

” Grocery chain Albertsons on Thursday lowered its 2026 fiscal outlook, citing pressure on its core grocery business and a pullback in consumer spending. Every product that moves will have higher costs baked into the price Higher fuel costs for ships, trucks and air carriers can trickle down to consumers and businesses that depend on shipping.

UPS, FedEx and other shipping services introduced fuel surcharges and other fees as fuel prices increased. According to an AFS Logistics and TD Cowen Freight Index released July 14, truckload pricing is at a four-year high because of rising fuel costs and capacity constraints.

Andy Dyer, CEO of AFS Logistics, said diesel prices in the second quarter were about 51% higher than in January and February, while jet fuel prices rose 90% from a year earlier. “Beyond the direct impact of higher freight bills paid by shippers, these price movements also have second-order effects that squeeze rates higher,” he said.

“Smaller truckload carriers working on tight margins may park trucks and wait for fuel prices to revert to more palatable levels before returning to operation.” Retailers are noticing consumers pulling back Rural lifestyle retailer Tractor Supply Co.

reduced its annual sales outlook on Thursday, citing in part higher fuel prices during its spring selling season that weighed on customer spending. ”Our customers often drive longer distances to shop frequently in pickup trucks, many of which are diesel-powered, making them especially sensitive to higher fuel costs,” CEO Hal Lawton told analysts.

Lawton said customers are still investing in their pets, animals, farms and properties, but shopping has become “more deliberate.” Customers are consolidating trips, prioritizing needs-based purchases and taking a more measured approach to discretionary spending.

Back-to-school shoppers may face higher prices The Footwear Distributors and Retailers of America trade group warned in a report Wednesday that increasing freight and material costs, along with rising tariffs costs, are creating big challenges for the footwear industry as companies prepare for the back-to-school shopping season and the remainder of the year.

Matt Priest, CEO and president of the trade group, said some of its members have cited 25% price increases for petroleum-based materials used in footwear manufacturing due to the Middle East conflict. Those costs could eventually translate into roughly a 5% increase in the cost of finished footwear products sold to consumers, Priest said in the report.

Footwear companies have been front-loading inventory and accelerating imports before President Donald Trump imposes new tariffs on foreign products, putting additional pressure on shipping rates, he said. “Container rates are spiking right now,” Priest said.

Higher jet fuel costs lead to costlier flights Since the war began, airlines have responded to the jump in fuel costs by raising fares and add-on fees, and trimming flights or routes that are no longer profitable at higher fuel prices. Those moves can help protect the airlines’ margins, but also leave travelers facing higher prices and fewer options, particularly in smaller or less competitive markets.

In the latest sign that the conflict is driving up costs for the travel industry, American Airlines on Thursday reported a sharp decline in second-quarter net income despite record revenue and strong spring travel demand. American said higher fares helped offset nearly half of its higher fuel bill but not enough to prevent it from lowering its full-year outlook.

Despite higher prices, jet fuel demand in the last four weeks increased 9% compared to the same time last year, according to EIA.

This week, three Saudi oil tankers carrying crude for India and China made a U-turn in the Red Sea amid the ongoing crisis. The oil tankers - the Xin Long Yang, the Rodos and the Amazon - made a U-turn after the Houthis declared a naval blockade against Saudi Arabia, opening a new front in the US-Israeli war with Iran.

The move has raised concerns over global energy supplies. Also Read: India loses Russia oil discount as Red Sea, Hormuz risks upend crude markets In the long term, blockades in both the Strait of Hormuz and the Bab al-Mandeb have the potential to hurt India.

The Houthis, in an email sent to shipping companies, warned them not to load or discharge cargo at Saudi Arabian ports and said such activity may result in being targeted "in any location." The Houthis control northern Yemen, including the coast of the Bab al-Mandeb, the strait at the mouth of the Red Sea.

After the blockade of the Strait of Hormuz, Saudi Arabia's Red Sea port of Yanbu has become the main alternative route for West Asian oil, enabling exports of millions of barrels a day. Reports of the planting of mines have further complicated the passage of commercial vessels through parts of Hormuz.

Also Read: Houthis claim attacks on Saudi tankers in Red Sea, raising risk of new chokepoint in Iran war (You can now subscribe to our Economic Times WhatsApp channel) (Catch all the Business News, Breaking News and Latest News Updates on The Economic Times.

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Shipping data showed that two Chinese supertankers carrying a combined 4 million barrels of Saudi Arabian crude exited the Red Sea via the Bab el-Mandeb Strait on Thursday after loading at Yanbu. The vessels, chartered by Unipec and bound for Chinese ports, had paused earlier in the Red Sea before resuming transit, while other VLCCs scheduled for the route reportedly slowed.

Claims of a Houthi-imposed blockade and related attacks on shipping remain unverified in available reports.