UK inflation pressures hits three-year high; Nobel prize for economics awarded today

Oil prices climbed to their highest levels in nearly two weeks on Monday morning as fresh attacks on Saudi Arabia and oil tankers near the Strait of Hormuz put Middle East supply risks back at the center of the market, outweighing President Donald Trump's announcements of additional Russian diesel supplies and a Russia-Ukraine energy ceasefire. West Texas Intermediate was trading at $93.78 per barrel, up $1.93, or 2.10%, on Monday morning, while Brent crude rose $2.09, or 2.00%, to $106.80 per barrel, according to Oilprice.com data. The renewed buying followed a weekend of attacks on Saudi Arabia, including a Houthi strike on Riyadh's international airport on Saturday that killed 13 people and wounded more than 300. Further attacks were reported Sunday, while two tankers were struck near Oman and in the Strait of Hormuz. The tanker attacks threaten to interrupt the recovery in Gulf oil exports, which reached 81% of prewar levels in September. Crude and condensate shipments had recovered to 91%, but refined-product exports remained at just 60%. Goldman Sachs raised its December Brent forecast to $90 per barrel from $85, estimating that geopolitical risks are currently adding just over $20 per barrel to oil prices. The price increase comes as OPEC has sharply reduced its expectations for global oil demand growth this year. OPEC Secretary General Haitham Al Ghais said Monday that the producer group now expects demand to grow by just 400,000 barrels per day in 2026, down from the 1.4 million bpd it forecast at the beginning of the year. OPEC expects much of the demand deferred during this year's disruptions to return in 2027. The group had already cut its 2026 growth estimate to 380,000 bpd in September, meaning Monday's 400,000-bpd figure is actually a slight increase from last month's forecast even though it represents a 1-million-bpd reduction from OPEC's outlook at the beginning of the year. The International Energy Agency expects an even deeper demand hit this year, forecasting a 2.5-million-bpd decline in global consumption in 2026 followed by a 2.6-million-bpd rebound in 2027. Additional Russian barrels could put some downward pressure on fuel prices. Trump said Friday that Russia would immediately supply more than 300,000 metric tons, or roughly 2.25 million barrels, of diesel to U.S. and global markets, with additional supplies to follow. Moscow has also partially lifted restrictions on diesel exports, allowing another 500,000 tons, or about 3.7 million barrels, onto the international market. Trump also announced Sunday that Russia and Ukraine had agreed to stop attacking each other's energy infrastructure. Ukrainian President Volodymyr Zelensky accused Russia of violating the agreement on Monday. In the Gulf of Mexico, Shell, Chevron and BP were preparing to restore offshore production after Hurricane Isaias disrupted operations over the weekend. By Charles Kennedy for Oilprice.com More Top Reads From Oilprice.com

Pakistan is encouraging its refiners to consider buying crude oil from Libya to diversify its oil supply amid the Middle East crisis, Pakistani Petroleum Minister Ali Pervaiz Malik says. Ali Pervaiz has met with Khalifa Rajab Abdulsadek, Minister of Oil and Gas of Libya, on the sidelines of an energy event in Saudi Arabia to discuss strengthening cooperation in the oil and gas sector. During the meeting, the Pakistani minister told his Libyan counterpart that the South Asian country had encouraged its refineries to explore the possibility of importing Libyan crude oil, local media reported. To boost its energy security, Pakistan also plans to upgrade refineries, build critical infrastructure, and increase domestic oil and gas exploration, both offshore and onshore, the federal minister said. A Turkish seismic vessel is expected to arrive in Pakistan next month to begin data acquisition in the Indus Basin, Ali Pervaiz said. Earlier this year, Pakistan's national Oil and Gas Development Company Limited (OGDC) signed an agreement with a Canadian firm to deploy advanced technology to boost production from heavy crude oil fields. Under the agreement with Canada's Synergetic Oil Tools Inc., OGDC will deploy advanced Passive Energy Tool technology aimed at optimizing and boosting production from heavy crude oil fields, the Pakistani firm said. Since the Iran war crippled oil and fuel supply from the Middle East, Pakistan’s key energy supplier, the South Asian country has paid record premiums for fuel imports, scrambled to procure alternative crude oil supply, and paid the highest price for LNG cargoes since 2022, when spot prices in Asia spiked to record highs after the Russian invasion of Ukraine and the slashed pipeline gas supply from Russia to Europe. Pakistan’s refiners have been inquiring with traders about potential crude oil supply from the U.S., Nigeria, and Central Asia, amid the crisis in the Middle East that threatens supply from both the Strait of Hormuz and the Red Sea. By Tsvetana Paraskova for Oilprice.com More Top Reads From Oilprice.com

Saudi Arabia was forced to extend the suspension of all flights to and from its main international airport in Riyadh on Monday after a further round of Houthi missile attacks caused more damage and left one dead. The Gulf nation said it was taking the step after Houthi missiles killed 13 people on Saturday and left more than 300 injured. Saudi state TV broadcast CCTV footage that showed passengers deluged in smoke and falling masonry as they queued at the airport terminal to board a plane just as the Houthi missile struck. King Khalid international airport was being kept closed to complete verification of the airport’s safety, the Saudi aviation authority said. Saudi Arabia’s military spokesperson also said further missile and drone threats had been detected. View image in fullscreen Before and after the strike as people queue up for flights at King Khalid international airport on Saturday. Photograph: Saudi Ministry of Media/Reuters The closure came as the country pressed ahead with the 25th WPC Energy Conference in Riyadh, hoping to project an image of normality. The Saudi energy minister, Abdulaziz bin Salman, told the conference that “fear has no place in the Saudi lexicon”, emphasising that the resilience of the kingdom’s energy system and the determination of its people to confront crises. An urgent review is under way as to how Houthi missiles are repeatedly penetrating badly stretched Saudi air defences. Schoolchildren and some office workers were advised to work from home. The Houthis have also targeted the city of Khamis Mushait, and the King Fahd international airport in Dammam. Interceptor missiles are needed to protect government buildings, oil facilities and infrastructure hubs across a wide geographic area. The Houthis have vowed to attack Saudi airports across the country. Houthi attacks since last month have targeted fuel tanks at Riyadh airport and its affiliated warehouses, destroying a parked Airbus A320 passenger plane and damaging at least five other aircraft. The crown prince, Mohammed bin Salman, has not been seen in public since Tuesday last week, reflecting the pressure he is under to find a way out from a war that has intermittently dogged his leadership since 2014. Inside Yemen, fighting continued in and around Taiz, the third city, and the most populous governorate, with Saudi air planes mounting eight separate strikes on any assembly of Houthi forces. As many as 60 fighters died on Sunday from both sides. The governor of Taiz, Nabil Shamsan, on Sunday issued an urgent call to lift the Houthi siege and warned a shortage of medicines meant the city would soon run out of emergency surgical and intensive care services. Overall the Houthis claimed the Saudis had mounted 124 raids through Sunday. The Saudis are seeking to locate Abdul-Malik al-Houthi, the reclusive leader of the Houthis, with rumours of his assassination repeatedly circulating, but Saudi Arabia does not seem to have contemporary intelligence on his precise whereabouts either in the capital Sana’a or in its stronghold of Saada. View image in fullscreen A billboard displays an image of the Houthi leader, Abdul-Malik al-Houthi, in Sana’a, Yemen on Sunday. Photograph: Yahya Arhab/EPA On the diplomatic front, Abbas Araghchi, the Iranian foreign minister, spoke to the Saudi foreign minister, Faisal bin Farhan, on Sunday to see if there was a way in which Iran could act as a mediator between the Saudis and the Houthis, a group that Iran has trained and armed. A meeting of the UN security council in New York on Tuesday is expected to debate a resolution calling the Houthis a foreign terrorist organisation. The exiled leader of the Southern Transitional Council (STC), Aidarous al-Zubaidi, called for southern forces to fight on all fronts, and not just to defend the borders of the former South Yemen, in a move that is likely to be welcomed by Saudi Arabia as it supports the week-old call by the UN-recognised government to drive the Houthis out of the whole of Yemen, rather than just from the southern governorates. The STC has a vision of an independent South Yemen that would recreate the separate state that existed between 1967 and 1990. The reunification of Yemen at the end of the cold war proved fragile and many southerners nurse longstanding grievances about the distribution of resources in the unified state. The STC’s authority has been challenged by Abd al-Rahman al-Mahrami, the Salafist leader who commands the powerful Southern Giants Brigades. Despite Araghchi’s efforts to reach out to the Saudis, Mohsen Rezaei, the more hardline secretary of Iran’s supreme national security council, claimed Iran was hitting five or six small vessels in the strait of Hormuz every night, explaining the vessels were being used by the Emirati military to move oil through the strait to larger tankers, thus breaching the blockade that Iran is seeking to maintain to push up oil prices and weaken Donald Trump. Esmail Baghaei, the Iranian foreign ministry spokesperson, said Trump’s treatment of Volodymyr Zelenskyy, including his call for the Ukrainian president to stand aside showed the risks in dealing with Trump. He said: “Being an enemy of America can be dangerous, but being a friend of America is deadly. You can see for yourself what America’s friendship and enmity with its allies is like.”

Oil prices traded slightly lower in the early morning in Europe on Monday as U.S. President Trump’s announcement of an “energy ceasefire” between Russia and Ukraine offset this weekend’s escalation in the Middle East. Brent Crude prices were at $104 per barrel, and the U.S. benchmark, WTI Crude, traded at about $91 a barrel, down by 0.2% and 0.7%, respectively. The King Khalid International Airport in the Saudi capital Riyadh was hit by the Yemen-based Iran-backed Houthis with ballistic and cruise missiles on Saturday in an attack that killed 13 people and injured more than 300 others. On Sunday, the airport was hit again in another attack that killed one person and wounded 11 others. Although these attacks have not been aimed at energy infrastructure, the weekend escalation from the Houthis and the recent events in the Saudi-Houthi fight for control of the parts of Yemen with direct access to the Bab el-Mandeb Strait could widen the conflict in the Middle East. The events “show that risks to supply from the region remain, despite oil flows from the Persian Gulf being at their highest levels since the start of the US-Iran war,” ING’s commodities strategists Warren Patterson and Ewa Manthey wrote in a note early on Monday. Early on Monday, the market appears to be ignoring the Middle East story and is hoping for a Russia-Ukraine energy ceasefire – announced by the U.S. President – to increase global diesel availability. Trump has also lifted sanctions on Russian diesel and struck a deal with Vladimir Putin to import Russian diesel, some of it immediately, in an attempt to lower record-high diesel prices ahead of the midterm elections on November 3. The deal “is not going to solve the tightness in the middle distillate market,” ING’s commodity experts said, but noted that the announcement is pressuring down gasoil cracks on Monday. “Clearly, in the run-up to the midterm elections, pressure is growing on Trump to address high oil and diesel prices – but in order to see a more meaningful move lower in refined product prices, we will need to see normalisation in the Middle East,” ING’s analysts said. By Tsvetana Paraskova for Oilprice.com More Top Reads From Oilprice.com

Oil producers and consumers need to strengthen their cooperation, and Asian countries specifically need to boost oil stockpiles and infrastructure, Japan’s trade minister has said. Speaking at the virtual International Energy Forum, Ryosei Akazawa said that Japan will seek to take on the role of a “bridge” between Middle Eastern oil producers and oil importers in Asia to stabilize global energy supply as energy security becomes a top priority, overtaking efforts to shift away from oil and gas. Security of energy supply has in fact become so important that even the Asia Zero Emission Community, headed by Japan, has redirected its focus from emissions to oil supply. Earlier this month, the organization agreed to build a more substantial oil inventory in Asia and coordinate releases when the need arises. “Expectations for Japan are extremely high because of its extensive experience with stockpiling,” a state minister for economy, trade, and industry said last week. Japan moved in the spring to release crude oil from its strategic reserves as part of an IEA-coordinated global effort to release 400 million barrels of crude and oil products. The country holds the third-largest strategic oil stockpile in the world, after China and the United States. In April, the U.S. Energy Information Administration estimated China’s inventory at 1.397 billion barrels, followed by the U.S. reserve, at 413 million barrels, with Japan holding 263 million barrels of crude in strategic inventory. Since the war in the Middle East began, resource-poor Japan has scrambled to secure crude oil supply from alternative sources as its dependence on crude from the Middle East passing through the Strait of Hormuz was more than 90% of all crude imports. By Charles Kennedy for Oilprice.com More Top Reads From Oilprice.com

08.33 CEST Introduction: UK business inflation pressures hits three-year high; Good morning, and welcome to our rolling coverage of business, the financial markets, and the world economy. Having missed out on the Nobel Peace Prize, again, Donald Trump is unlikely to trouble the scorers in Stockholm today when the economics equivalent is handed out. Instead, Trump’s Middle Eastern conflict is proving – to no-one’s surprise – that high energy prices fuel inflation, and that geopolitical instability hurts growth. Just this morning, a new report shows that UK businesses are facing the sharpest inflation pressures in three years, due to rising energy, fuel and raw material costs. Accountancy and advisory firm BDO has reported that its inflation index rose to 103.65 in September, up from 102.18 in August and its highest reading since June 2023. These elevated costs and weakening demand are putting renewed pressure on firms ahead of the Autumn Budget, BDO warns. Their report has also found that output fell across UK manufacturing and services last month as domestic demand softened. Scott Knight, head of growth at BDO, says: double quotation mark “Businesses head into this Budget with one clear message: no surprises. Cost pressures continue to squeeze margins, hiring intentions are low and growth is starting to plateau. Firms are not looking for grand interventions, but they do need certainty. Right now, concerns about further downside risks outweigh expectations of positive change.” The oil price has dropped slightly this morning, though, after Trump declared that Ukraine and Russia have agreed to halt attacks on each other’s energy facilities following the US diesel-supply deal with Moscow announced on Friday night. Brent crude had been down around 2% a few hours ago – but it’s now just 0.25% lower at $104.46 a barrel, a fairly small move really. Kyle Rodda, senior financial market analyst at Capital.com, explains why: double quotation mark A highly contentious US deal with Russia to allow the export of more diesel to ease pressure in the market for the critical industrial fuel helped slightly with optics. But the true impact is piecemeal, especially as Middle East refining remains heavily compromised and Ukrainian forces strategically strike Russian refineries. The agenda All day: Paris Motor Show From 10.45am BST: Nobel Prize for economics announced 2pm BST: Russia’s trade balance for August

On Saturday, Houthi rebels launched a shocking and deadly attack on Saudi Arabia’s capital city, Riyadh. At the time of writing, the missile strike on King Khalid international airport has killed at least 13 people and left 300 injured, marking a significant turn in a regional conflagration that is only getting more intense. It was the single most deadly attack on any Gulf country since the US and Israel launched their war on Iran in February. In Saudi Arabia, a country that is unaccustomed to such fatalities, the death toll is bewilderingly high and likely to prompt a bloody response. Over the past year, the Gulf has entered a new era of instability that is not temporary and cannot be reversed. This may feel like an overstatement – casualties have been relatively low, after all, compared with Gaza and Iran – but the gradual erosion of peace and security in places such as Saudi Arabia, Qatar and the UAE has changed the region more dramatically than its leaders would like to acknowledge. The first audacious and unthinkable thing happened just over a year ago, when Iran fired missiles at an airbase in Qatar that hosts American troops, in retaliation for US strikes on Iranian nuclear facilities. Lighting up Doha’s skies and scattering shrapnel, it was a dismaying moment for the Qataris, who have tried to maintain good relations with Iran. But even then there was a degree of warning and coordination that signalled this was a face-saving measure on the part of the Iranians. Yet later in 2025, with no similar warning or choreography, Israel struck Doha, targeting Hamas members and killing five Palestinians and one Qatari. That was the beginning of the end of a longstanding norm and expectation – that there was a sanctity to Gulf lives and sovereignty, one secured by the management of the relationship with Iran and alliances with the US. Then came Donald Trump and Benjamin Netanyahu’s war on Iran, which drew the Gulf once and for all into the fray. In retaliation for what Iran perceives to be political, military and logistical support for the offensive against it, Tehran struck Saudi Arabia, Qatar, the UAE, Bahrain, Kuwait and Oman. Iran targeted military sites, energy facilities, desalination plants – an entire infrastructure that underpins the economies of these countries. Much damage was inflicted by the suspension of normal life, the shuttering of schools for months, the closure of airports and airspace. The most disastrous consequence of all, from the perspective of Gulf rulers, has been the way the attacks have disrupted the integration of these countries into the cosmopolitan international community as places for tourism, entrepreneurs, sports and entertainment. They spent billions in securing Formula One, golf and boxing franchises and tournaments, only for a flurry of cheap drones to put it all at risk. The result is a fractious unravelling that has reactivated hostilities that had laid dormant. Yemen’s civil war began in 2014 when Iran-backed Houthi rebels, in aspiration to greater autonomy in the minority Shia homelands, took over the capital city, Sana’a. In 2015, a coalition of countries led by Saudi Arabia led a brutal campaign to dislodge the Houthis from territories they had gained, intensifying a grinding civil war that killed hundreds of thousands and triggered a humanitarian catastrophe. The war deescalated in 2022 with a de facto but unformalised division of the country between the Houthis and an internationally recognised, Saudi-backed government; the ceasefire was followed by rapprochement between Saudi Arabia and Iran. But the 2026 war against Iran opened up strategic opportunities and stirred political loyalties, triggering a surge of Houthi advancement in Yemen. The closure of the strait of Hormuz, for example, shifted more commercial traffic along Yemen’s coastline, prompting the Houthis to make advances and seize territory in order to gain control of the now crucial Bab al-Mandab strait in the Red Sea. Tensions came to a head five months after the start of the war, with Saudi Arabia escalating strikes against the Houthis, and the Saudi-backed government bombing its own airport in Sana’a to prevent an Iranian plane from landing. These developments are not just the result of a mischievous group seizing the moment, acting as spoiler in a bigger contest between Iran and the west. The Houthis are backed by Iran, but they are not empty proxies for Iran; they have domestic ambitions and sharp regional animosities, particularly against the House of Saud, which they see an imperious and arrogant master to whom they shall never submit. A senior Houthi official said that Saturday’s attack took place “so that the world understands” that Yemeni civilian infrastructure has been, and is being, targeted by the Saudis, gesturing towards that sense that Riyadh treats Yemeni lives as cheap. skip past newsletter promotion Free newsletter | Weekly Sign up to Matters of Opinion Guardian columnists and writers on what they’ve been debating, thinking about, reading, and more Enter your email Sign up after newsletter promotion From another perspective, what we are witnessing in the region is another consequence of Hamas’s 7 October attacks on Israel, and what followed in Gaza, Lebanon and Iran. The final piece that was stabilising the region’s tense equilibriums fell away when Trump decided that the safety and security of the US’s Gulf allies was secondary to his Iran “excursion”, as he called it. The limits of relying on the US security umbrella became clear both to allies and enemies. Last month, the Trump administration refused to extend military assistance to Saudi Arabia to fight the Houthis, after a meeting of US officials with the Houthis, who assured them that they would not attack US ships in the Red Sea, only Saudi vessels. What is upon Saudi Arabia now is a long, intractable war with a resourceful and impassioned antagonist, one willing to sustain a high degree of pain in ways that Riyadh can’t match without orienting itself entirely towards war. If the 2015 campaign is anything to go by, it will claim thousands of lives with only a remote possibility of a decisive outcome. And so Saudi, and the entire Gulf, are pulled further into the relentless storm. Trump cannot bring the Iran war to an end, Gaza remains an open wound, Israel continues to strike and occupy parts of Lebanon. The Houthi resurgence represents a new reality in a region that is bewildered and losing lives and capital, stuck between old alliances that no longer work and new hostilities that are too calamitous to confront.

Millions of British van drivers face a combined £2.5bn cost to cover the rising price of diesel this year, according to figures, fuelling calls for the government to scrap its planned fuel duty rise. The owners of diesel vans and pickups can expect to collectively spend almost £8.5bn at the pump this year, according to analysis for the Guardian, after diesel prices climbed to record highs due to a global fuel shortage caused by disruption to refineries in the Middle East and Russia. The estimated fuel costs, calculated by analysts at Moneysupermarket, is significantly above the £5.95bn spent last year, raising concerns that the price of food and goods transported by road could rise sharply as retailers pass on increased logistics costs. The comparison site warned last week that the average fuel bill for a van driver could reach £1,965 this year, up from £1,294 for the average van in 2025 based on typical mileage and fuel consumption. The number of vans on British roads has grown significantly in recent years fuelled by the boom in online shopping, home deliveries and the rising number of self-employed people working in trades. Although the adoption of electric vans has begun to increase, about 95% of light commercial vehicles are still powered by diesel. The average pump price climbed to a above £2 a litre for the first time this month, up over 40% since late February, when the US-Israel war on Iran began disrupting supplies of crude and refined oil products from the Gulf, leading to cost increases across the economy. The rising cost burden has led to calls for government help in the upcoming budget, including abandoning plans to raise fuel duty from next year. The planned increase – postponed from September – will add 3p a litre in duty from 1 January, and another 2p from 1 March, in “a hammer blow” for costs, according to the Road Haulage Association (RHA). Richard Smith, the RHA’s managing director, said: “Many of our members run on margins of around 2%. Surging diesel prices are impacting firms across the country, with some spending many thousands extra every week on fuel. “Adding [fuel duty rises] on top of today’s fuel prices would be a hammer blow for many firms that move goods and the households that buy them. A fuel duty hike is a food price hike.” Data from the motoring group RAC showed that, despite a recent dip in the cost of diesel, the price remains about 57p a litre higher than before the US-Iran conflict while petrol remains 42p higher. This means households are paying £31 and £23 more respectively every time they fill up a family sized car, according to the group. The fuel duty rise “will only make prices at the pump even more expensive,” according to Simon Williams, the head of policy at the RAC. “As things stand, this year is still set to be the second most expensive year on record for drivers,” Williams said. “The government has the power to take some of the sting out of higher fuel costs, either by extending and increasing the fuel duty cut or reducing VAT as they’ve done with domestic electricity.” Smith added that the RHA was calling on the chancellor to bring in a 15p a litre rebate for British van, coach and haulage operators after Spain, France and Italy offered similar help for commercial vehicle businesses. “It’s time we caught up,” he said. On Friday, the US president, Donald Trump, attempted to ease pressure at the pump for US drivers by announcing a deal for Russian deal, in a move which infuriated the Ukrainian president, Volodymyr Zelenskyy. The government was contact for comment.