The Forecourt Doesn’t Lie

I pulled up to my local forecourt last week and did a proper double-take. 142p for diesel a few weeks before. 166p staring back at me. That’s not a gradual rise. That’s not inflation doing its usual slow creep. That’s a forecourt telling you — in big illuminated numbers — that something has gone very wrong in the world.

And something has.

What’s Actually Happening

The strait hasn’t been formally blockaded, but in practical terms it might as well be. Drone and missile threats, naval mine risks, and the sudden surge in war-risk insurance costs caused tanker traffic to collapse. Many vessels simply refused to make the journey, choosing instead to anchor outside the Gulf rather than risk entering the corridor. Some ships that have attempted transit have reportedly come under attack.

That single choke point matters enormously. Roughly one in every five barrels of oil traded globally passes through that stretch of water. When traffic there stops, even temporarily, the shock ripples straight through the global energy market.

Before the conflict, Brent crude was trading around $62–$65 a barrel. Within days it surged past $100, briefly touching close to $120 during overnight panic trading before pulling back slightly. By mid-March, prices have settled into the $98–$101 range — still a dramatic move in such a short space of time.

In other words, markets are now trying to price something they hate the most: uncertainty around a critical piece of the global energy supply chain.

What You’re Paying at the Pump

And here’s the part that should genuinely worry you: we haven’t felt the full impact yet.

Petrol stations buy their fuel days or weeks in advance. The fuel you’re buying today may have been purchased before the worst of the oil spike. The full effect of $100+ oil typically takes two weeks to feed through to the forecourt. So, prices are still rising.

The RAC has been blunt about it. If oil stabilises around $90 a barrel, expect diesel to hit 167p on average nationally. If it pushes toward $120 — which analysts at Barclays and UBS consider a real possibility if the Strait remains effectively closed — diesel could approach 180p and petrol near 150p.

The Lorry Driver You Never Think About

Road freight carries 81% of all goods moving around the UK. Your food. Your Amazon packages. The materials that build your house. The clothes on the rail in Next. All of it moves by lorry, and all of it runs on diesel.

Fuel accounts for 30-40% of a haulage company’s total operating costs. And those businesses are already on the edge — the average pre-tax profit margin in UK road haulage is around 1.5-2%. That’s not a business with fat to trim. That’s a business where a bad month can finish you.

Every single penny on a litre of diesel costs the average HGV operator £400-£600 per vehicle per year. Diesel is up nearly 18p since the war started. Do that maths. That’s potentially £7,000-£10,000 extra per truck per year, and the full impact still hasn’t fed through.

Some of that cost gets passed on via fuel surcharges. But hauliers on long fixed-term contracts can’t reprice overnight. They absorb it. Some won’t survive absorbing it.

And when the costs do get passed on? They get passed on to retailers. Who pass them on to you. At the checkout. On everything.

Your Summer Holiday Just Got More Expensive

Airlines aren't immune either. Jet fuel typically accounts for 20-25% of an airline's entire operating costs — the second biggest expense after staff wages.

Some airlines bought themselves time through hedging — locking in fuel prices months in advance. Ryanair, for example, was reported to be 84% hedged at $77 per barrel for the current quarter. They're sitting relatively comfortably right now. But those hedges roll off. By autumn, they'll be buying at whatever the market is doing.

The airlines with no hedging are already bleeding. And they're already responding. Fuel surcharges are appearing. Base fares are going up. Experts have stopped asking if ticket prices will rise and are now only debating by how much and for how long.

If you're booking a summer holiday, book it now. The price you see today is likely the cheapest it's going to be for a while.

The Inflation Trap — And Why the Bank of England Is Stuck

This is where it gets properly complicated, and where the consequences spread far beyond the petrol station.

When fuel costs more, everything costs more. Transport, manufacturing, agriculture, retail — the entire cost of running the economy goes up. That feeds into inflation. Not the kind of inflation you can fix by raising interest rates — this is cost-push inflation, driven by a supply shock, not by people spending too much money.

And that creates a nightmare for the Bank of England.

If they raise rates to tackle inflation, they hammer consumers who are already squeezed by higher fuel bills and rising shop prices. Mortgages get more expensive. Businesses stop hiring. Spending falls faster.

If they cut rates — or even hold them — they risk looking like they're ignoring an inflation reignition just as it's getting started.

There's no clean answer. And the longer the oil price stays elevated, the worse that dilemma gets.

There's Another Hit Coming — And Most People Don't Know About It

While all of this is unfolding, there's a completely separate piece of bad news that most people haven't heard about.

Back in March 2022, when oil spiked after Russia invaded Ukraine, the government cut fuel duty by 5p per litre as emergency relief. It was meant to last 12 months. They kept extending it. Five times across four years.

That relief ends on 31 August 2026.

After that, fuel duty increases in three steps:

• 1 September 2026 — up 1p per litre
• 1 December 2026 — up another 2p per litre
• 1 March 2027 — up a final 2p per litre

By March 2027 the full 5p has been restored. That's £2.75 more per 55-litre tank — before VAT on top. And from April 2027, fuel duty starts rising annually in line with inflation for the first time since 2011.

So the government is going to add tax to your fuel in September. Regardless of where oil is trading. Regardless of what's happening in the Middle East. It's coming.

The Consumer Pullback — And The Recession Question

Here's how this plays out over the coming months if the war continues.

You're already feeling it at the pump. Within the next few weeks, shop prices start rising as haulage costs feed through the supply chain. By May or June, consumer confidence starts cracking — people aren't just spending more, they feel poorer, and they start cutting back. Restaurants. New clothes. Big purchases. The stuff that keeps the economy moving.

Businesses see falling demand and rising costs simultaneously. They pause hiring. Delay investment. The knock-on effect is higher unemployment, which hammers spending further.

GDP typically starts contracting six to twelve months after the initial oil shock. But the consumer feels it much sooner than the official numbers show it.

Historically, the window to avoid serious economic damage is tight. If the conflict ended this week, oil would fall sharply — geopolitical price spikes can reverse in days once the threat credibly eases — and most of the damage would be a short, sharp shock. A close call, but survivable without a recession.

If it runs through to summer, the damage is already baked into supply chains, business confidence, and consumer budgets. September's fuel duty hike lands into an already weakened economy. Recession risk becomes very real.

If it's still going at Christmas, we're not asking whether there will be a recession. We're asking how deep.

What This Means If You're Investing

I'll cover the trade setups in more detail in a future post, but in brief, this creates clear winners and losers.

The obvious winners are energy companies. BP and Shell are benefiting directly from elevated oil prices. Their revenues track crude, and both have significant upstream production. Worth watching.

The losers are the sectors that absorb the cost without being able to pass it all on. Consumer discretionary — retailers, restaurants, leisure. Transport and logistics companies on thin margins. Housebuilders, who need consumer confidence and cheap borrowing to sell houses.

And the Bank of England being stuck — unable to cut rates into a reinflating economy — means the rate-sensitive sectors that were pricing in rate cuts are going to have a rough time.

The Number On The Board

Most people pull up to the forecourt, wince at the number, fill up anyway because they have no choice, and drive off. The car only runs on diesel. Demand is inelastic, as the economists put it. You pay what you're asked.

But that number on the board isn't just about your tank. It's a live readout of everything happening in the world right now. A war 3,000 miles away. A shipping route that carries a fifth of the world's oil. A government tax cut running out in August. Lorry drivers absorbing costs they can't sustain. Airlines repricing your summer holiday. A central bank with no good options.

All of it, distilled into three digits on an illuminated sign.

The question isn't whether this hurts. It already does. The question is how long it lasts — and whether it turns from a painful shock into something that reshapes the next year or two of economic life in this country.

Watch the oil price. Watch the Strait of Hormuz. And maybe, if you haven't already, book that holiday sooner rather than later.

So What Do You Actually Do As A Trader?

This is the question I've been wrestling with all weeks. And honestly? It's harder than it looks.

The obvious move feels like piling into shorts — betting against the airlines, the housebuilders, the retailers. The economy's getting squeezed, the data backs it up, so get in and profit from the pain. Simple, right?

Not quite.

Here's the problem nobody talks about loudly enough. This whole situation hinges on a single unpredictable event — the war. And wars can end suddenly. A ceasefire announcement, a diplomatic breakthrough, a deal that reopens the Strait of Hormuz — and oil falls 20% in a session. Everything you're short rips violently higher. You can be completely right about the economic damage and still get blown out of a trade because the news moved faster than your stop loss.

So, before anyone does anything, I think there are four honest positions available right now.

Do nothing. Sit on your hands. Preserve your capital and wait for the picture to clarify. This feels terrible — especially if, like me, you've got an impulsive brain that hates inaction. But missing a loss is still a win. In a market driven by an unknowable geopolitical event, cash is a legitimate position.

Go long energy. BP and Shell are the obvious ones. If oil stays elevated, their revenues go with it — that's just how the business works. This is the cleanest trade available because you're going with the macro rather than fighting it. The risk is that a sudden peace deal sends oil crashing. But it's a more manageable risk than being short something that can gap up 15% overnight on a headline.

Short the damaged sectors. Airlines, mid-market retailers, and over-leveraged consumer businesses. These will hurt as costs rise and customers pull back. But — and this matters — some of them have already fallen hard. Shorting something that's already down 25% is a very different trade from shorting something at a high. The market isn't stupid. A lot of the damage is already priced in.

Buy the watchlist. This one is personal. I've had a list of stocks I've wanted to own for ages — quality businesses that were just too expensive. Now they've come down. The temptation to jump in is real.

But here's where I have to be honest with myself. That excitement I feel when a stock finally hits the level I've been waiting for? That's not analysis. That's my brain confusing "thesis playing out" with "good time to buy." Those aren't the same thing. A stock can reach your target price and then fall another 30% because the world gets worse faster than you expected.

The Framework I'm Using Before I Touch Anything

First — has it already priced in the damage? If a stock is down 20-25% it may already reflect a recession, or could there be much further downside?

Second — what happens to this stock if the war ends tomorrow? Will the stock return to normal pricing quickly?

Third — does this company have the balance sheet to survive 12 months of elevated costs? The ones that don't are short candidates. The ones that do might be the long entries I've been waiting for — just not yet.

Fourth — where's my stop? With this much binary risk in the market, I need to know exactly how much I'm prepared to lose before I enter. Not after. Before.

Scaling In — Not Going All In

Three tranches. A small first position to get some skin in the game, a second if the trade moves in my direction and confirms, a third once the trend is established.

This matters for me personally because my natural instinct — the ADHD trader's instinct — is to see a setup, get excited, and go full size immediately. Every time I've done that in a market like this one, I've regretted it. Scaling forces patience. It also means if I'm wrong on timing, I haven't committed everything to a bad entry.

The other rule I'm keeping right now: no new shorts on anything that could be directly rescued by a peace deal overnight. The reward isn't worth the risk of a violent squeeze.

There will be good trades to come out of this situation. Some real opportunities are forming. But the discipline right now is waiting for clarity before acting — not chasing every move the market makes while the world figures out what happens next.

More on the specific stocks I'm watching in the next post.