Oil prices have jumped to their highest levels since Russia invaded Ukraine in 2022 as Donald Trump considers putting boots on the ground in Iran.

Brent crude, the global oil benchmark, rose by 3pc to break above $112 per barrel on Friday, 9pc higher than last week and 84pc higher since the start of the year. The US benchmark, West Texas Intermediate, closed in on $99.

The latest surge in prices came as the conflict escalated on Friday, with the Pentagon drawing up plans for an invasion of Kharg Island, the key oil terminal in the Persian Gulf.

Meanwhile, Iraq’s state-owned oil giant has cut production by three quarters as Iran’s blockade of the Strait of Hormuz continued to halt exports.

The turmoil in the Middle East sent stock markets tumbling around the world, with the US benchmark S&P 500 down 1.5pc and the FTSE 100 falling by 1.4pc.

Higher oil prices are expected to feed through into petrol and diesel prices, with warnings that the cost of food will also increase.

Meanwhile, the cost of UK government borrowing surged to its highest level since 2008 as investors feared an inflation shock.

The yield on 10-year gilts, as government bonds are known, rose above 5pc on Friday for the first time in nearly 18 years.

The Bank of England has said it “stands ready to act”, signalling it could raise interest rates to combat inflation.

City investors are now betting on three increases this year, which would take interest rates to 4.5pc by the start of 2027.

08:01pm

That’s all from us today. You can read all our latest business and economics news here. Have a lovely weekend.

08:00pm

Oil prices have settled at their highest level since the 2022 energy crisis as the war in Iran intensifies.

Brent crude rose by 3pc on Friday to settle above $112 per barrel, 9pc higher than last week.

This means the global oil benchmark has surged by 84pc since the start of the year.

Stock markets tumbled around the world with the US benchmark S&P 500 down 1.5pc and the FTSE-100 falling by 1.44pc.

07:48pm

Iraq’s state-owned oil giant has cut production by three quarters as Iran’s blockade of the Strait of Hormuz halts exports.

The Gulf state’s oil minister ​Hayan Abdel-Ghani ‌said the Basra Oil Company has cut crude oil production from 3.3 million barrels per day to 900,000.

07:24pm

America’s small cap stocks plunged into correction territory on Friday, meaning they have dropped by more than 10pc since their peak.

The Russell 2000 index dropped by 2.4pc on Friday. The stock market has fallen by 10.5pc since its January 22 high earlier this year.

The US benchmark S&P 500 was down by 1.59pc while the tech-heavy Nasdaq Composite fell by 2.09pc and the Dow Jones Industrial Average fell by 1.06pc.

07:02pm

The price of Brent crude has jumped by 3.8pc today to nearly $113 per barrel after reports that the US has made detailed preparations to deploy US ground forces in Iran.

Senior military commanders have made requests to prepare for this option as Donald Trump weighs his next move in the war, CBS News reported.

Asked by reporters in the Oval Office on Thursday if he was considering this, Mr Trump said: “No, I’m not putting troops anywhere.”

But then he added: “If I were, I certainly wouldn’t tell you.”

The price of Brent crude is now up by 55pc since the conflict began.

The price of West Texas Intermediate (WTI), the US benchmark, rose by 2.8pc to $98.50. This means the gap between Brent and WTI has widened to $14.50, nearly five times its typical $3 discount.

06:38pm

The US was aware of the “detrimental” threat to the Gulf’s energy supplies if it attacked Iran, according to the boss of QatarEnergy.

Saad al-Kaabi, chief executive of the state-owned gas giant, told Reuters: “I was always warning, talking to executives from oil and gas that are partnered with ‌us, talking to the US Secretary of Energy, to warn him of that consequence and that that could be detrimental to us.

“They were aware of the threat, and they were always reminded by me, almost on a daily basis, that we need to make sure that there is restraint on oil and gas facilities.”

06:30pm

Iraq has declared force majeure on all of its oilfields developed by foreign companies as Iran’s blockade of the Strait of Hormuz halts its exports.

The Gulf state normally exports 3.2 million barrels of crude per day but has been forced to start shutting down production because it does not have enough storage for the oil it can no longer ship out.

Force majeure is a clause that exempts a party from fulfilling its contractual obligations in the face of a major unforeseen event.

05:54pm

Donald Trump’s White House will have final say over which ships will be eligible for the $20bn insurance scheme the US is launching to restart traffic through the Strait of Hormuz.

The insurance policies being offered through Mr Trump’s scheme will only be available to ships that meet the “eligibility criteria” provided by the US Government, according to insurance giant Chubb, which will act as the initiative’s lead underwriter.

It will see the US International Development Finance Corporation (DFC) work with insurers to cover both ships and their cargoes “under certain conditions” while travelling through the narrow waterway, which has effectively been closed by Iran.

The public-private partnership is aiming to reopen the Strait of Hormuz, which acts as the transit route for 20pc of the world’s supplies of oil and liquified natural gas (LNG).

Trump announced the plans in a post on Truth Social earlier this month, with a pledge “to provide, at a very reasonable price, political risk insurance and guarantees for the Financial Security of ALL Maritime Trade, especially Energy, travelling through the Gulf.”

05:33pm

UK stocks tumbled even further on Friday as the Middle East crisis rocked global energy supplies.

The FTSE-100 closed down by 1.44pc, meaning the UK index has fallen by 9pc since the war in Iran began and is now at its lowest level since December 2025.

The FTSE-250 fell by 1.01pc on Friday and has plunged by 11.3pc since the conflict began. It is at its lowest level since November 2025.

05:22pm

Deutsche Bank has slashed £4bn off its growth forecast for the UK as soaring energy prices hit households’ spending power.

The UK’s growth expectations have been cut from 1.1pc to just 0.7pc this year, and from 1.4pc to 1.2pc in 2027 as the war in Iran wreaks havoc on the global economy.

Deutsche Bank’s chief UK economist Sanjay Raja said the blow will knock nearly £4bn off UK GDP by the end of next year.

Higher energy prices mean Deutsche Bank has raised its forecast for UK inflation from 2.4pc to 2.9pc this year.

Mr Raja said: “Higher inflation will squeeze real disposable incomes. Spending and investment decisions will likely be cut on the back of this. Higher uncertainty will also impact demand.

“The bad news is that energy markets are pricing in a longer uplift to energy prices than before – suggesting more upside risks to our projections.

“The longer the Iran conflict lasts, the higher the premium on energy prices. And the more damage that oil/gas facilities sustain, the longer the road to lower energy bills.”

05:07pm

Oil prices are heading for their biggest three-week rise in nearly 40 years.

The price of Brent crude rose by more than 1pc on Friday to $110, meaning it is now up by 51pc since the war in the Middle East began.

This is the largest three-week percentage increase since at least 1989, according to LSEG.

04:46pm

Theoretically, the war in Iran should mean a stronger dollar. The US is one of the few energy producers that stands to benefit from higher prices after all.

In the last month, the greenback has climbed by 1.83pc against a basket of other currencies.

But George Saravelos, global head of FX research at Deutsche Bank, warns that this upwards trend may not last and a number of “countervailing forces” from the Middle East crisis will bring downwards pressure on the dollar.

Mr Saravelos said: “In contrast to 2022, interest rate differentials in this crisis are not moving in favour of the USD. Central banks are moving in a hawkish direction much more quickly, with all of the Bank of England, Bank of Japan, Riksbank, and ECB delivering hawkish press conferences this week. Our economists now expect the ECB to hike twice this year.”

When a country raises interest rates, its currency typically strengthens because there is a higher return on holding it. If other countries have higher interest rates than the US, investing in dollars will be less appealing in relative terms.

At the same time, central banks in Asia and the Middle East are likely to finance their higher import bills by running down their foreign currency reserves, Mr Saravelos said.

“his prevents currencies from weakening so lessening the inflation shock while preserving domestic fiscal space. Incidentally, it reduces US fiscal space by putting upward pressure on UST yields.”

He added: “The bottom line is that the nature of this shock and the transmission channel to policy and capital flows is proving quite different to 2022. And it is not all necessarily dollar bullish.”

04:28pm

Homebuyers are racing to secure mortgages as lenders pull deals without announcing any replacements.

Coventry Building Society said it will withdraw rates for new customers on Sunday but has not indicated when it will announce replacement rates.

The Co-operative Bank and West Bromwich Building Society have both announced they will withdraw fixed rates for new customers at close of play today with no immediate replacements.

HSBC will also increase its rates on Monday for the third time in three weeks.

David Hollingworth, of L&C Mortgages said: “Lenders are more frequently withdrawing at very short notice and/or pulling deals without any immediate replacement. The spike in funding costs results from the market view that future interest rate movement has shifted from further cuts this year to more increases.

“The frequent rate changes are causing significant spikes in business volume for lenders.  That is almost inevitably going to put some strain on servicing, so borrowers may see the time to receive a mortgage offer edge out.

“I expect that mortgage borrowers will have to resign themselves to more rounds of repricing next week and those looking to secure a new deal face a ‘now you see it, now you don’t’ marketplace, at least in the near term.”

04:17pm

Government borrowing costs across the eurozone have soared to a 15-year high as the war in Iran drives new inflation fears.

Yields on 10-year German bonds, which are the benchmark for the wider eurozone, jumped by another eight basis points on Friday to 3.04pc, their highest level since 2011.

Rates on two-year German Bunds rose by 10 basis points to 2.66pc.

Traders are now expecting the European Central Bank to raise interest rates at least twice this year.

04:13pm

The war on Iran is hammering Dubai’s property market as the UAE loses its safe haven appeal, new analysis shows.

Home sales in Dubai in the first 12 days of March plunged by 49pc compared to the same period in February and were down 37pc year-on-year according to Goldman Sachs.

This was a far larger drop than during the 2024 Dubai floods.

The median sale price has dropped by 3pc compared to a year earlier.

In some cases, homes are being offered for sale with discounts of as much as 15pc, Reuters reported.

Shares in property developers have plunged. Emaar Properties, the company that built the Burj Khalifa, has dropped by more than 26pc since the war began.

03:31pm

Airlines are drawing up plans to cancel flights amid fears that jet fuel will dry up as the war in the Middle East drags on.

Carriers such as Air France-KLM said they were considering options that could include cancelling routes in some parts of the world with less stable fuel reserves.

While Europe currently has enough stocks to supply airlines in the next month or so, other countries are more dependent on Gulf flows and could see shortages sooner.

03:11pm

Mortgage rates have surged since the start of the Iran war as fears of an inflationary shock upended global markets.

The average five-year fixed rate has leapt from 4.95pc at the start of the month to 5.39pc on Friday, which is its highest level since July 2024.

Two-year rates have also jumped to one-year highs of 5.35pc, having dropped to 4.83pc before the conflict began.

Lenders have pulled nearly 1,000 products from the mortgage market this month in in the worst turmoil since Liz Truss’s mini-Budget crisis in 2022.

Mortgage rates are influenced by government borrowing costs on the gilts market, which has been hit hard by fears that the Middle East conflict will drive up prices.

Rachel Springall of Moneyfactscompare.co.uk, which compiled the data, warned that more rate increases were “on the cards”.

“The shocks caused by the unrest in the Middle East are having a catastrophic impact on the UK mortgage market,” she said.

“The damage is certainly being felt by two-year fixed mortgages, and in fact, if rates keep moving up as they are, average rates could-well end up inverting again, where the five-year becomes lower than two-year.

“This abnormality also happened after the fall out from the mini-Budget, and it took around three years for the inversion to end.”

02:50pm

The FTSE 100 plunged in afternoon trading over fears that higher interest rates will hit economic growth.

The UK’s flagship stock index was down 1pc as the energy shock from the Iran war continued to reverberate.

Stocks have come under pressure as traders ramp up bets on central banks raising interest rates to combat a surge in inflation caused by higher oil and gas prices.

Money markets indicate the Bank of England will raise interest rates three times this year and are betting on a 50pc chance of a jump in rates by the US Federal Reserve.

Kallum Pickering, chief UK economist at Peel Hunt, said the “costs and consequences of this war will be more far-reaching and longer-lasting than we and markets had previously assumed”.

“Global interest rates have surged as money markets increasingly bake into their expectations a protracted conflict and bet that major central banks will need to raise rates to curb inflationary pressures,” he said.

“Destruction of Middle Eastern energy and industrial capacity has intensified. Repairing and rebuilding the damage will take time and involve significant cost.

“Even if the fighting stops immediately, the global economy will face higher energy costs and a shortfall in Middle Eastern supplies until capacity is restored – this will take many, many months.”

02:29pm

US stocks have fallen hard as traders bet that there was an increasing chance that the Federal Reserve could raise interest rates later this year.

The S&P 500 was down 1pc in early trading on Wall Street as money markets showed there was a 50pc chance that American consumers could be hit with an increase in borrowing costs later this year.

The benchmark index in New York is on track for a fourth weekly loss in a row, which is its worst run in a year.

The Dow Jones Industrial Average sank by 0.6pc and the tech-heavy Nasdaq Composite was down 1.3pc.

02:24pm

The cost of borrowing through the Treasury’s benchmark bond rose above 5pc for the first time since 2008 on Friday.

The yield on 10-year UK gilts rose from 4.84pc at the start of trading to 5.01pc, hitting levels last seen in the lead-up to the global financial crisis.

02:17pm

Money markets indicated there is a 50-50 chance that the US Federal Reserve will raise interest rates later this year.

Traders had wagered that the US central bank would to announce at least two cuts later this year once new chairman Kevin Warsh takes charge in May.

The current Fed chairman Jerome Powell has come under considerable pressure to lower borrowing costs from Donald Trump, who called him a “numbskull” and a “moron”.

However, traders have reversed course and begun preparing for rate rises over the energy shock caused by the US president’s war in the Middle East.

02:08pm

The “vulnerability” of Britain’s economy has been laid bare by a surge in government borrowing costs over the Iran war, investors have said.

The yield on 10-year UK gilts, a benchmark for the returns offer to buyers of Treasury debt, has climbed to within a whisker of the symbolic level of 5pc as an energy shock ripples through the economy.

Matthew Amis, investment director at Aberdeen, said it had been “another blockbuster week in the gilt market”.

He said UK borrowing costs had been hit by “the aggressive move higher in global energy prices, slightly loose language from the Bank of England opening the doors to rate hikes and talk of fiscal packages from the Labour administration”.

“One of these things happening would be enough to get the gilt market nervous, but when you get all three in one day the result is 10-year gilt yields heading for close to 5pc.

“In an alternative reality, where the conflict in the Middle East never happened, the Bank of England would have just cut interest rates and gilts would be heading for 4pc, spurred on by weaker wage data. That shows the vulnerability of the UK’s economic position today.”

He said he thinks Andrew Bailey, the Governor of the Bank of England, “did not sound like a man who was going to raise rates three times by September” after traders priced in the moves on Friday.

However, he said confidence would not return to the UK bond market until there is a “de-escalation in the Middle East”.

01:55pm

Greenpeace activists launched a protest today alongside a vessel headed for the North Sea, as pressure ramps up on ministers to ease the cost of living for households during the global energy crisis.

The PetroJarl Rosebank, which was reflagged to the UK in January while being refitted in Dubai, is being towed to UK waters by large ocean-going tugs ready to potentially work on the Rosebank oil field.

Rosebank, 60 miles west of Shetland, could generate up to 500 million barrels of oil and gas and is awaiting sign off by Energy Secretary Ed Miliband.

01:27pm

Banks have been hit hard by the war in Iran, which has upended forecasts for inflation and rates.

Lenders listed on the FTSE 100 and FTSE 250 have fallen by 14pc since the start of the conflict.

HSBC, the largest listed bank in Europe, has fallen 8.9pc, hurt in part by its considerable exposure to Asia and the Middle East.

Barclays has dropped by nearly 19pc, while Lloyds Banking Group has dropped 10pc. Banks are often considered proxies for the health of an economy.

Goldman Sachs said banks had been an “outperformers in early 2022, but have not been so far in this recent crisis”.

12:58pm

Inflation will reach double the Bank of England’s 2pc target later this year as motorists grapple with soaring petrol prices, economists have warned.

The consumer prices index will rise to 4pc in the second half of this year, according to Oxford Economics, after a “much sharper rise in petrol prices” than previously expected.

It estimates that diesel prices will rise to £1.90 per litre and unleaded rise to £1.70 over the next two months.

RAC figures on Thursday said a litre of diesel cost an average of £1.64, while petrol prices at £1.43.

Senior economist Edward Allenby said: “Under our updated assumptions, we now anticipate a much sharper rise in petrol prices, while higher wholesale gas prices cause a 19pc increase in the Ofgem energy price cap in July.”

Oxford Economics also downgraded its forecasts for the economy this year, projecting growth this year of 0.4pc, compared to 0.9pc it said in February. Growth next year would drop from 1.3pc to 1pc.

Mr Allenby added: “Higher fuel and energy costs, as well as the upward pressure these will have on other prices, point to a greater squeeze on real household incomes.”

12:38pm

The price of tungsten is surging as the crisis in the Middle East fuels demand for missiles, shells and other munitions.

Analysts said the critical mineral had seen a “stunning” 500pc rally in the past year after China imposed export restrictions and the US-Iran war squeezed global supplies.

The “war metal” is widely used in defence because of its tough, dense nature and 3,422C melting point, which makes it ideal for high-temperature applications.

12:13pm

Forecasts that energy bills will rise by more than £300 later this year are “highly speculate”, the the Prime Minister’s official spokesman said.

Number 10 stood by its ambition to get bills down by £300 by 2030 despite analysts at Cornwall Insight predicting the Ofgem price cap will rise by £332 from July over the Iran war energy shock.

The Prime Minister’s official spokesman said: “As the Energy Secretary has said, bills are too high and we stand by our promise to get bills down by up to £300 by 2030.

“Our clean energy mission is the way to do that for good. Energy bills are coming down in April thanks to the action we took at the Budget and households will be protected in the coming months.

“As Ofgem has said it is genuinely too early to tell the impact of this conflict on the next price cap.

“This idea that £300 is being added to bills is highly speculative. Using short-term wholesale price fluctuations to predict what will happen in the next few months is highly speculative.”

12:00pm

Downing Street said there is no need for Britons to work from home to help bring down soaring oil and gas prices.

The International Energy Agency advised commuters around the world on Friday to work remotely to lower demand for fuel, as the Iran war chokes of supplies from the Gulf.

The Prime Minister’s official spokesman said: “This is the IEA’s general advice for countries across the world. It is not in place in the UK.

“We have a diverse and resilient supply. People in the UK should continue to go about their days in a normal fashion.

“Both the AA and Fuels Industry UK have been clear drivers should fill up as normal.”

11:41am

Customers of Britain’s biggest stockbroker have been locked out of their accounts during a period of severe market volatility caused by the war in Iran.

From Thursday evening, investors trying to log on to Hargreaves Lansdown’s website were unable to access their cash savings, pensions and investment accounts because of an IT failure.

Investors were left unable to trade despite significant market volatility caused by conflict in the Middle East.

11:31am

11:11am

The Chancellor is ready to “intervene as is appropriate” as the Iran conflict hits the cost of living, a minister has said despite official data showing higher than expected Treasury borrowing.

Local Government Secretary Steve Reed insisted the UK’s economy is in the “best place” to weather challenges posed by the war, even as the Office for National Statistics showed Britain borrowed a near record amount in February.

Higher public spending and rising debt interest payments saw the Chancellor borrow £14.3bn to plug the gap between tax receipts and government expenditure, which was nearly double the amount forecasted by the Office for Budget Responsibility.

Rachel Reeves has faced pressure to ease the burden on households from the Iran war energy crisis. This week she announced a £53 million support package for low-income households who rely on heating oil, which is not protected under the Ofgem price cap.

Mr Reed said: “The Government is monitoring the situation hour by hour, and we stand ready as things change, to intervene as is appropriate.”

He added: “The Government can’t always stop all the storms that may happen around the world, but when those storms come in, we can weather them far better because of a much more stable economy that we’ve got now.”

Public sector borrowing was £14.3 billion in February 2026, £2.2 billion more than in February 2025 and the second highest February borrowing since monthly records began in 1993, behind that of 2021.

Read the article ➡️ https://t.co/kWncONP8Bg pic.twitter.com/rlS9gnKzB8

— Office for National Statistics (ONS) (@ONS) March 20, 2026

10:46am

The cost of government borrowing has surged to its highest level since the global financial crisis as the Iran war pushes up energy prices.

UK bond yields, the return the Treasury promises to holders of the £2.9 trillion national debt, have surged as the conflict threatens an inflation shock.

The yield on 10-year gilts, as the bonds are known, has leapt from 4.3pc before the start of the Middle East war to 4.93pc on Friday.

It is its highest level since July 2008, just two months before the collapse of Lehman Brothers triggered the global financial crisis and the dramatic decline in interest rates that followed.

It comes after the Bank of England warned it “stands ready to act” to bring down inflation, prompting traders to price in three increases to interest rates before the end of this year.

Susannah Streeter, an analyst at Wealth Club, said: “Worries that interest rates may have to be increased sharply to contain a new price spiral have sent the cost of financing UK government debt sharply higher.”

10:22am

For years, global oil prices existed in a kind of harmony, rising and falling in step with each other as the ebbs and flows of supply and demand moved them in near lockstep.

But now the US and Israeli assault on Iran and its closure of the Strait of Hormuz has changed all that.

In recent days, oil prices have splintered sharply – leading markets into uncharted waters and posing risks to Europe.

10:07am

The Bank of England will raise interest rates three times this year in response to the inflation shock from the Iran war, money markets show.

Traders are betting that policymakers will increase the Bank Rate to 4.5pc before the end of the year, after leaving it at 3.75pc on Thursday.

The market puts the odds of a rate rise at the next meeting in April at 77pc after JP Morgan said it expects policymakers to push up rates to 4pc next month.

Traders expect further rate rises to come no later than July and November.

Allan Monks, an analyst at JP Morgan, said the Bank of England is “likely to hike to safeguard its credibility... with fears amplified by recent inflation history and the expected longevity of the gas shock”.

However, Mark Dowding, chief investment officer at RBC BlueBay Asset Management, said rate rises were “unlikely”.

He said: “Unlike 2022, when higher energy prices coincided with aggressive policy tightening, the economy in 2026 is in very different shape to where it was post-Covid and the pent-up demand coming from prior stimulus.”

09:49am

Gold is a sure-fire bet to protect against uncertainty. When everything else is falling, gold rises. At least, that’s the received wisdom.

But ever since the US and Israel launched a series of unexpected strikes on Iran, gold has fallen in value.

As the conflict worsened and dragged more countries in the region into the fray, the metal fell further.

And now the Strait of Hormuz is effectively closed, trapping a fifth of the world’s oil and gas, gold is losing its lustre.

09:25am

Oil and gas prices have retreated after Thursday’s painful cost spikes over the escalating Iran conflict, as analysts warned of more potential turbulence.

Financial markets calmed at the end of another turbulent week, with UK natural gas prices flat early trading.

Prices jumped more than a fifth on Thursday to the highest level in three years at one stage. Europe’s benchmark contract was up down 0.3pc.

Brent crude oil was little change at $109 a barrel after big gains on Thursday saw it rise as high as $119.

The declines follow a statement late on Thursday by Israeli’s Prime Minister Benjamin Netanyahu that he would hold off on any further attacks on Iran’s gas field at the request of Donald Trump after the Iranian retaliation sent oil prices skyrocketing.

Financial markets also steadied, with the FTSE 100 in London up 0.3pc and similar gains across Europe, with the Cac 40 in France up 0.4pc and Germany’s Dax 0.8pc higher.

Swissquote analyst Ipek Ozkardeskaya said: “Despite a relatively calmer morning session, the uncertainty and the volatility will remain on the menu.”

Analysts at Saxo added: “Despite the calmer price action, concerns remain that the impact of the conflict will be felt long after hostilities eventually subside.”

08:59am

Energy bills will jump by £332 a year from July as the Iran war sends oil and gas prices soaring, experts have warned.

Cornwall Insight on Friday predicted that the Ofgem price cap will rise from £1,641 to £1,973 when it is next reassessed in the summer.

The estimate is sharply higher than a prediction made only last week, when Cornwall Insight forecast bills would rise by £186 from July.

It follows a surge in gas prices after Iranian strikes on a major Qatari gas field. Natural gas prices jumped by 11pc on Thursday after the attack on the Ras Laffan facility.

Commodity prices have surged since the start of the Iran war, with Brent crude oil up 50pc and European gas nearly doubling.

Cornwall Insight, which correctly predicted the last change in the price cap to the pound, has been steadily increasing its forecasts for bills as the Middle East conflict has dragged on.

Britain’s biggest power generator EDF has separately warned that bills will be more than £300 higher for at least the next year.

It predicted that bills will rise to £1,858 from July, rising to £1,919 from October and £1,928 next January. This forecast was based on the Strait of Hormuz being reopened within weeks and a prolonged closure would mean prices rising even higher.

As well as higher bills, households also face the threat of higher borrowing and mortgage costs.

JP Morgan has predicted the Bank of England will raise interest rates in April and July to combat an expected jump in inflation. If the forecast comes to pass, rates would hit 4.25pc by the summer.

08:48am

A larger than expected increase in Treasury borrowing will put further pressure on “already strained” public finances as the effects of the Iran war begin to seep through, economists warned.

Government borrowing jumped last month to the second highest February level since records began, according to the Office for National Statistics.

Public sector borrowing stood at £14.3bn in February, which was £2.2bn higher than a year ago, and nearly double the £7.4bn forecast by the UK’s fiscal watchdog, the Office for Budget Responsibility (OBR), in November last year.

Thomas Pugh, chief economist at RSM UK, said Rachel Reeves’s fiscal headroom could easily be halved by the surge in inflation and bond yields caused by the Middle East conflict.

He said: “Looking ahead, spending and tax receipts will be heavily influenced by energy costs and if the government takes action to support households and businesses as it did in 2022 and 2023.

“But higher interest rates inflation and a likely rise in unemployment all suggest that spending will have to rise further, which implies at least a temporary increase in borrowing.”

Sir Mel Stride, the shadow chancellor, said: “Labour have raised taxes by £66bn but still can’t control borrowing, with £14.3bn borrowed in February alone, the highest February monthly borrowing since the pandemic, and debt interest more than double our defence budget, we’re saddling the next generation with the cost of their failure to live within our means.

“Labour have made irresponsible choices: dropping plans to cut spending, hiking taxes on business and wealth creators which has pushed debt to levels not seen since the 1960s.”

08:29am

Spain will reduce the value-added tax ​on ‌fuel as part of measures to cushion the economic blow from the Middle East conflict, according to reports.

VAT will drop to 10pc from 21pc, according to SER radio station.

It comes as Chancellor Rachel Reeves faces pressure to support households in the face of the impending energy price shock.

Sir Keir Starmer has made it a key pillar of his government to help families with the cost of living.

Spain also plans to suspend the excise ‌duty ‌on hydrocarbons, ⁠which would lead to an immediate reduction in the price of diesel and petrol.

The drop is expected to be ⁠between 30 to 40 cents on the euro per litre, the SER report added.

The government will eliminate a ​5pc tax on electricity consumption, ‌according to the report. A government spokesperson declined to comment.

08:07am

The FTSE 100 rose at the open after Israel reduced tensions in the oil and gas market.

Benjamin Netanyahu said he would hold off on any further attacks on Iran’s South Pars gas field at the request of Donald Trump.

Oil and gas prices had rocketed after Iran retaliated with strikes on energy infrastructure across the Gulf.

But on Friday, Brent crude was down 1.2pc to $107 a barrel, while European gas prices were down as much as 5.1pc.

The FTSE 100 rose 0.5pc to 10,115.98 at the open, while the mid-cap FTSE 250 jumped by 0.6pc to 21,684.33.

07:59am

Rachel Reeves has suffered another setback after official figures revealed near record public borrowing in February ahead of pressure on the public finances expected from the Iran war.

Higher public spending and rising debt interest payments saw the Chancellor borrow £14.3bn to plug the gap between tax receipts and government expenditure.

This is £7bn higher than the forecast by the Government’s tax and spending watchdog and represents the second highest borrowing since monthly records began in 1993.

It means Ms Reeves is likely to miss her full-year borrowing target set by the Office for Budget Responsibility (OBR) just weeks ago.

07:54am

A sanctioned Serbian oil company has been given a reprieve by the US as the global energy crisis deepens.

Petroleum Industry of Serbia (NIS) had a temporary operating licence extended as a deal nears to potentially remove Russia’s majority shareholding.

The decision avoids another shutdown of the country’s only oil refinery, after US sanctions hit it as part of a crackdown on Russia’s energy sector.

Energy minister Dubravka Djedovic Handanovic said: “The extension of the licence for nearly a month is particularly important at this moment when oil prices are rising on the stock markets every day.”

The new licence is valid until April 17.

“The refinery in Pancevo continues to operate, and the supply of petroleum products will remain reliable,” she added.

Negotiations over the sale of a Russian-majority stakeholding in the Petroleum Industry of Serbia (NIS) have been ongoing for months with Hungarian energy giant MOL.

The US Treasury Department has given NIS until March 24 to complete the sale, and MOL Serbia boss Milenko Jankovic said he expected to meet the deadline.

NIS, which supplies 80 percent of Serbia’s fuel market, was forced to halt production at its main Pancevo refinery in December after long-delayed sanctions cut off crude supplies.

07:38am

A minister has said that Britons do not need to “tighten our belts” despite soaring costs because of the war in Iran.

Emma Reynolds, the Environment Secretary, said the Government would continue to monitor the cost of living and would do all it could to provide support for households.

Asked by Times Radio if “we need to tighten our belts”, Ms Reynolds said: “This is a really obviously worrying situation in the Middle East. But I think the Prime Minister has taken consistent and clear and calm headed leadership on this.

“We weren’t dragged into this war and we’re doing all that we can as a Government to de-escalate this conflict.”

Pressed on whether she would advise the public to change their behaviour, Ms Reynolds responded: “I wouldn’t. I want to reassure people that we are, as a Government, taking calm-headed leadership on this issue…

“The Chancellor has been clear she will provide targeted support for those who need it. It is a worrying time for families but let’s all keep a watching eye, we’re keeping a watching eye as a Government.”

07:20am

Wall Street’s biggest bank has predicted the Bank of England will raise interest rates twice in its next three meetings as soaring oil and gas prices push up inflation.

JP Morgan said policymakers would raise borrowing costs by a quarter of a percentage point in April and July, taking the Bank Rate to 4.25pc.

The Bank of England kept rates on hold at 3.75pc on Thursday but warned it “stands ready to act” as it forecast inflation would climb to around 3.5pc over the next six months.

Goldman Sachs and BNP Paribas have also flagged a significant risk of a near-term rate hike – potentially as early as the April meeting – if global energy prices continue to climb.

Morgan Stanley said it still sees “some chance of a cut” in the final three months of this year in the event of “a very swift resolution in the Middle East”.

07:14am

The IEA has set out 10 actions it says governments, businesses and households can introduce immediately to reduce demand for oil.

The actions, as listed on the Paris-based body’s website, are:

1. Work from home where possible
Displaces oil use from commuting, particularly where jobs are suitable for remote work.

2. Reduce highway speed limits by at least 10 km/h
Lower speeds reduce fuel use for passenger cars, vans and trucks.

3. Encourage public transport
A shift from private cars to buses and trains can quickly reduce oil demand.

4. Alternate private car access to roads in large cities on different days
Number-plate rotation schemes can reduce congestion and fuel-intensive driving.

5. Increase car sharing and adopt efficient driving practices
Higher car occupancy and eco-driving can lower fuel consumption quickly.

6. Efficient driving for road commercial vehicles and delivery of goods
Better driving practices, vehicle maintenance and load optimisation can cut diesel use.

7. Divert LPG use from transport
Shifting bi-fuel and converted vehicles from LPG to gasoline can preserve LPG for cooking and other essential needs.

8. Avoid air travel where alternative options exist
Reducing business flights can quickly ease pressure on jet fuel markets.

9. Where possible, switch to other modern cooking solutions
Encouraging electric cooking and other modern options can reduce reliance on LPG.

10. Leverage flexibility with petrochemical feedstocks and implement short-term efficiency and maintenance measures
Industry can help free up LPG for essential uses while reducing oil consumption through quick operational improvements.nal improvements.

06:53am

Thanks for joining me. The International Energy Agency (IEA) has urged people to work from home as the Iran war intensifies the energy crisis sweeping the globe.

The body said people should limit commuting where possible as the worldwide energy shock becomes “more and more severe”.

It released a 10 point set of actions that it said could be “implemented quickly” by governments, businesses and households.

Top of this list was a request to “work from home where possible” which “reduces fuel demand for commuting”.

It also urged governments to lower highway speed limits by at least 10 kilometres per hour to cut fuel use across both passenger vehicles and freight.

IEA executive director Fatih Birol said he hoped the list would be “of use to governments around the world, in both advanced and developing economies, in these challenging times”.

The war in the Middle East has caused the largest ever disruption to global supplies in history, the Paris-based organisation said.

Around 20 million barrels per day of crude oil and oil products typically transit the Strait of Hormuz each day but this has slowed to what the IEA called “a trickle”.

The IEA last week launched the largest ever release of global oil reserves to alleviate the crisis, totalling 400 million barrels, but it said “supply-side measures alone cannot fully offset the scale of the disruption”. Here is what you need to know.

1) Diesel ‘to hit £2 a litre within weeks’ | Founder of London-based energy trader predicts fuel costs will rise ‘in the next month’

2) The nightmare scenario for energy markets has become reality | Any hit to Qatar’s gas would quickly raise UK bills, exposing how crucial that relationship is

3) The Observer offers voluntary redundancy to all staff | Loss-making start-up warns journalists at Sunday title that job cuts could become compulsory

4) Ex-Lloyd’s of London boss ‘who had workplace affair’ misses £2m bonus | John Neal resigned then lost out on £10m-a-year job elsewhere as a result of romance claims

5) AI becomes a battleground between tech bros and the masses | Fears over jobs and an influx of data centres are turning people against billionaires’ visions of a tech utopia

Oil prices gave up earlier gains as the Iran war continued, falling back to around $107 a barrel.

Oil prices had a roller-coaster day on Thursday with the Brent crude, the international standard, briefly surging to around $119 per barrel as attacks by Iran on oil and gas facilities around the Gulf escalated after Israel’s attack of Iran’s key natural gas field.

In early Friday trading, Brent crude fell following Israeli Prime Minister Benjamin Netanyahu’s remarks that he would hold off on further attacks on Iran’s gas field at the request of Donald Trump.

The retreat of oil prices helped stablize markets. South Korea’s Kospi gained 0.6pc to 5,798.23. Japan’s Nikkei 225 was closed on Friday on a holiday.

Hong Kong’s Hang Seng lost 0.6pc to 25,340.43, while the Shanghai Composite index was up 0.2pc to 4,013.16.

Australia’s S&P/ASX 200 was down 0.5pc, while Taiwan’s Taiex was trading 0.2pc lower.

On Thursday, US stocks fell as the energy crisis continued to rock markets on the 20th day of the war.

The S&P 500 fell by 0.27pc while the Dow Jones Industrial Average dropped by 0.44pc and the tech-heavy Nasdaq Composite fell by 0.28pc.

Metals producers were the biggest fallers on the stock market after gold dropped by 4.94pc and aluminium fell by more than 5pc.

Shares in US gold and silver mining company Hycroft fell by 12.4pc while Century Aluminium Company plunged by 10.3pc.

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