"We Haven't Seen The Full Economic Impact Yet!" | Oil Prices Rise As Iran Conflict Drags On

Added: 2026-05-03

[00:00:00]certainly the Middle Eastern war, the one conflict with Iran is having a big impact on our daily lives as we have seen the economic shocks from that war and many more to come. Let's talk about it with Elliot Wilson. He's a military writer and senior fellow at the Coalition for Global Prosperity. A very good afternoon to you, Elliot. Good afternoon to you. Thank you for joining us. Well, we have seen oil has jumped to its highest price since 2022 after reports that Trump well, report that Trump is going to be looking at new options in Iran. That these these talks that we were hoping were going to take place in Islamabad have not been have not happened and that we've had an the statement today on first one for a long time from the supposed current Iranian supreme leader Khomeini Khomeini, but it doesn't look like that the tensions are ramping down, but that means the economic impact is ramping up as well, doesn't it?

[00:00:56]It does. I mean, I think this was always going to be a problem because it was never going to be a short economic shock.

[00:01:01]You know, we we learned a little bit when the when the Houthi militia closed the the Red Sea a bit in 2024, but we didn't really take that very seriously, but it did have long-term impacts. And this is, you know, this is a fifth of the world's oil, a fifth of the world's liquid natural gas. The Americans are a little bit insulated because they produce so much themselves, but you know, worldwide prices going up will affect Americans and American consumers are acutely conscious of what they pay at the gas station for their for their petrol. $4 a gallon. I don't know how many liters are in a gallon. I'm I'm I'm rubbish at those sort of conversions, but certainly when the Americans moan about those sort of prices, you know, you ain't seen nothing yet. They would probably have a heart attack if they saw what people were paying here. But but looking at, you know, this this prices for oil here, I mean, $126 a barrel rising by almost 7% in the last few days from Brent crude. That has a massive impact, but there has ostensibly been no change in any actions in in the in the Iran conflict. But this is all about mood music, isn't it? Because this is basically what all the all those who play those markets and and are making decisions about, you know, was it the Brent crude oil you're you're going to be delivering in the next month, what that will be, whether or not you think the Strait of Hormuz is going to be reopened or not. Yeah, I think that's right. And I think the other problem is that I don't think President Trump has really thought a lot about how this is going to play out. I think he's been quite puzzled that the war is still going on, to be honest. I think he expected that after what were very effective military strikes for a few days, that everything would then peter out and the Iranians would say, "Okay, what what do you want?" And and we'll capitulate. But the Iranians have have dug in to an extent. There's been a kind of weird duck talk about who's closing the Strait of Hormuz. The Iranians close it and then the Americans say, "No, we're closing it." And you think, well, the it was pretty much closed anyway from the beginning of the conflict because insurance went up so much on on shipping.

[00:02:52]If it is reopened somehow, if the Iranians have put any serious effort into mining it, that's going to be a long job to clear. I mean, it could be 6 months. Although the Iranians were getting ships out until the American blockade, which so you could just simply follow those routes. Well, but I suppose of course they could have mined it further since that point. That's the problem. I mean, it's first identifying where all the the mines are and then getting rid of them. I mean, it's a very slow, very painstaking business and it happens to be one of the areas where both we and the United States have taken down our our military capacity in that part of the world. So, you know, this is not going to be a quick fix and I think from the American point of view, what's particularly significant is this could still be going on by the midterm elections in November. Yeah, I mean, that's Trump's problem, but it's all of our problem as well because we haven't really seen the full impact of the closure of the Strait of Hormuz yet because a lot of the the oil, the jet fuel, the diesel, the the helium that goes into, you know, microchips and all these other things that that we've been consuming, the price has gone up, but it there's still a supply because that's the stuff that had already left the Strait before the war started, weren't they? In late February. So, we're get we're about to hit the point when yeah, there's no stocks left. We're still talking about jet fuel being rationed, flights being canceled, premium extra charges on flights as a result people there's some holidays that they've already booked.

[00:04:11]We're talking about our heating bills, our our electricity bills going up for a lot of people and pretty much everything we buy in the shops because everything comes some point by sea or by air or by rail or by or by by lorry eventually. So, we are going to see that feeding through. How bad do you think it's going to get?

[00:04:30]It it could be it could it could be quite serious in terms of what you know, we're already in a cost of living crisis. We already in this country have some of the highest energy costs in in the world. So, I think we are particularly sensitive to that. And I think also you're exactly right talking about the sort of the lag in in the effect of it because we live in a culture which is very much what's the news today. And you know, in 6 months time we'll be thinking, well, what happened? Why are we suddenly still paying more for for oil or for all the goods in the shops? And I think that's going to be a a shock to people. I think also the shock of just not being able to do things we take for granted like you can't fly to your holiday destination because there is no jet fuel and no nothing we can do about this and it's not, you know, you're being victimized.

[00:05:08]It's just that that's what's happened.

[00:05:09]And at the same time we've we've got a population which seems to be saying, "We don't want anything to do with this war.

[00:05:14]We want it's not our war."

[00:05:15]Well, it kind of is now. I mean, it it's all our wars and it was always going to be actually. That's the reality. And is there any evidence that the government is on top of this? They keep saying, "Look, we're concentrating on this."

[00:05:24]PMQs, the Prime Minister saying, you know, "I'm talking about this. I'm chairing this meeting, that meeting."

[00:05:29]Are they going to do Are they doing enough? Is there any evidence they're doing anything to make this better for us? I think it's a vast exercise in displacement activity. I mean, they're they're talking about all these elaborate plans for a second coalition of the willing given how well the first one went because it still hasn't got anything to do. But you know, they're planning four or five steps down the line once there's a ceasefire. Well, nobody sees a ceasefire at the moment.

[00:05:51]And also, you know, we have so little to contribute in in terms of hardware and platforms to any kind of monitoring of a ceasefire. So, quite what we're bringing to the the the show apart from a sort of cheery smile and a cup of tea, I'm not entirely sure.

[00:06:04]Yeah, absolutely. Well, I don't know if the European nations are willing to let us say that. We shall see what happens.

[00:06:10]Great to talk to you, Elliot Wilson, for senior fellow at the Coalition for Global Prosperity. And Jay Wetherill Simons, just your final thoughts on this.

[00:06:18]Prime Prime Minister is quite right when we're all talking about the Mandelson affair or any other thing. Actually, people want us to government to concentrate on on dealing with these other issues and there's no doubt at all there's going to be a huge issue of hitting the economy and growth and our price rises and we've seen interest rates held today at 3.75.

[00:06:35]They're not going down because of this.

[00:06:37]That affects people's lives, affects businesses.

[00:06:40]But but is there any evidence the government is on top of this? Is capable of doing anything to help us? Well, I think the government's been on the back foot ever since the beginning of the Iran war, wasn't notified about it, didn't take part in it as Kier Starmer lost no no time in reminding us ad nauseam. I'm I'm literally every 5 minutes. And and didn't even defend our cyber security once it was attacked. So, constantly is behind the curve now talking about opening the Strait of Hormuz with some peaceful expedition with the French, but it remains to be seen whether that's going to be effective or not.

[00:07:05]>> Absolutely. I just want to break