In response to recent attacks on ships in the Red Sea by Houthi rebels, the US and UK launched strikes in Yemen, causing a 4% jump in the price of oil.
Brent crude reached $80 per barrel, marking its highest level this year, as Iran-backed rebels threatened to retaliate against Western military action.
Although the current price is lower than the highs seen during Russia’s invasion of Ukraine, the UK government worries that cargo traffic disruption could lead to energy shock.
The Treasury has modeled different scenarios, including a crude oil price increase of over $10 per barrel and a 25% rise in natural gas.
The UK government is concerned that the ongoing attacks on shipping in the Red Sea could put a strain on the country’s fragile economic growth.
