With a long-term resolution to the Iran war remaining elusive and the repercussions forcing up inflation in the UK, a downbeat mood is set to mark early trading.

The ceasefire extension hasn’t done much to calm nerves given that worries remain about the impact of the energy squeeze on the global economy. Shipments from the Middle East are in limbo and a resolution to the conflict remains elusive, and the price of Brent crude, the benchmark, reflects this. Although it’s dipped back slightly, it remains highly elevated, hovering just under $98 a barrel as the stalemate continues.

Iran has stressed it would not reopen the Strait of Hormuz while the US military continues intercepting tankers, while the US administration is showing no sign of changing tack. So with this crucial waterway still blocked, nerves are on edge about just how long it will take for critical supplies of oil and gas to flow out once more.

Consumers and companies are already dealing with the consequences, with prices at the pumps soaring and freight costs ratcheting up. It’s having an insidious effect on inflation, with prices rising more steeply in March, as the surge in energy prices began to seep across the economy.

The headline CPI rate jumped up from February’s 3% reading, reaching 3.3%, as higher fuel costs and renewed turbulence in global energy markets rippled through supply chains. These are the first flickers of the Middle East conflict heating up everyday costs, with volatile oil and gas market pricing hitting forecourts. There’s likely to be further flare-ups on the way, especially if a longer-term resolution isn’t agreed.

The renewed climb in fuel prices risks squeezing budgets just as some breathing room had begun to emerge. Shoppers have turned cautious, and it seems retailers have had to discount to shift stock, with prices for clothing and footwear declining sharply month on month. They dipped by 0.8% in the 12 months to March 2026 compared with a rise of 0.9% in the 12 months to February. It was the lowest recorded annual rate for March since 2021 when prices were hit by the COVID-19 pandemic. Clearly consumers are tightening their belts as another cost-of-living crisis arrives.

Every extra day the Strait of Hormuz remains closed, brings a fuel shortage crisis closer, with airlines scrambling to secure supplies. Fuel surcharges may become more prevalent, and holidaymakers are already bracing for potential cancellations as the busy summer period looms. Already air fares rose 10% in March, but this was mainly due to the timing of Easter, and there look set to be more war-induced price hikes to come.