We have put out this short video on social media:
Trump bombed Iran. Iran is threatening to close the Strait of Hormuz. Oil markets are panicking. Prices are rising. So are we facing inflation again? And how will the Bank of England react?
There is no audio version:
This is the transcript:
Oil prices are about to jump around the world.
On Saturday night, Trump bombed Iran.
Iran is now threatening to block the Strait of Hormuz, and 20% of the world's oil flows through there.
The consequence is that oil markets are going to go into panic.
Prices have already risen by $5 a barrel at the time that we're recording this video, and they could go up by more than $25 a barrel, bringing them to the significant, in emotional terms, $100 a barrel or more.
That's not because there's an oil shortage, though.
There isn't, and there won't be. But there will be intense profiteering around the possibility that there could be.
The consequence is obvious. Energy prices are going to rise. Whether that be the fuel you put in your car, the gas we burn to generate electricity or to use in your home, or anything else. Businesses are going to pass on these costs to customers, and so inflation will follow.
But this isn't a normal inflation. This isn't caused by wage growth in the UK, and it isn't caused by excess demand. In fact, we are going to have falling demand because prices will have risen. This inflation will be caused by profiteering. But if the Bank of England reacts, as normal, by tightening its monetary policy and increasing interest rates, things will get worse.
The Bank should not blame households for this because it isn't our fault.
The cause is international, not domestic.
Interest rate rises will punish the wrong people.
We need some smart policy at the moment. We don't need reflex panic, but will we get it? Or is the Bank of England about to make the inflation that's going to be created by oil price increases very much worse?
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Also of course a rise in oil prices is good news for Russia……..
Thank you, John.
You forgot to mention Saudi Arabia and shale investors in the US.
This https://consciousnessofsheep.co.uk/2025/06/23/the-sound-of-canaries-choking/ agrees.
Much to agree with
For info not publication.
This transmission caused my system to close inexplicably.
Maybe my system but maybe your setup ???
Not sure why….
Except it is a YouTube short…
You can just imagine the corporate ghouls rubbing their hands at this wonderful excuse to increase prices and raise profits even more.
Will there ever be an end to this nonsense?
So, Trumps ‘war’ is not really war.
It is ‘market making’ for a select number few?
Hello Richard.
You say – “we need some smart policy at the moment”.
With Starmer and Reeves being free market believers, and with this situation being an externality, what chance of this government at least trying to do whatever they can to help ordinary people manage the cost of this crisis? They’ll just wash their hands of it and say there’s nothing they can do. I can’t see them coming up either any smart policy interventions.
I fear you are right
The BoE didn’t worry about the causes of inflation last time so I doubt Andrew Bailey et al will let such things bother their decision making this time.
I hear popping corks and party streamers for the banks sitting on the gifted QE deposits.
Not often I think you are wrong Richard but I have it on good authority that Radical Rachel is to cut VAT to 1971 levels (8%) and thereby nip in the bud any inflationary tendencies in the economy. She will say she will cut prices at a stroke and be forever known as The Grocer. For their part the Bank of England are to take 1.5% off interest rates, resulting in lower costs to firms which they will pass on to consumers. Well I am a little hard of hearing in my dotage but I am pretty sure that is the essence of what my Golden Retriever barked. He’s not called Mr Red for nothing.
🙂
Richard, you may well be right. Iran/Israel/US conflict seems to suit financial speculation and the resulting so called market indicators influence politicians, policymakers and media commentators alike. Normally negatively!
It’s a feature of our economic system. Real economy and real lives don’t count. Jacobin article over the weekend said something similar.
BoE I think lives firmly outside the real economy as you have pointed out before so we can expect the wrong policy decisions.
I would like the court at the BoE to be replaced with more main street stakeholders as opposed to financial ones. We should also have national & regional representatives too our economy isn’t just about FTSE 100 or the Banks.
We also need to rewire the BoE organisation and indeed HMT/OBR.
Only an imaginative Chancellor backed by a good economic team could chart such a course of action.
Reeves and Starmer will never countenance such moves.
I’m reading Keynes Essays in persuasion and his writings still have something for us despite the differences between the 20s/30s and now.
What puzzles me isn’t just why we deal with imported energy inflation by punishing Brits with high interest rates, but why there is so little investment in that which would make us more immune from price shocks.
So tiny amounts spent on closed and open loop pumped hydro projects of which we could and should have thousands and which would:
• enable us to store electricity for weeks or months.
• stabilise the grid
• Be ready within three years or so.
• be unlikely to be a target for terrorists
• would make renewable energy more attractive than ever, given the enhanced storage we would have once we install thousands of modular closed loop systems.
Instead it’s massive funds for nuclear energy projects that won’t be ready for decades, if at all. Even more money thrown down the drain producing hydrogen using fossil fuels and to put in a gas network that we should be working towards closing down. Certainly no shortage of weird thinking in the heart of government.
Mike Parr?