UK inflation is likely to rise due to the ongoing US war with Iran, Chancellor Rachel Reeves has warned, saying a “rapid de-escalation” in the Middle East would help prevent a surge in energy costs. Reeves stopped short of announcing any new relief measures for households facing higher prices and declined to cancel a planned 5p fuel duty increase in September. The Conservative Party plans a Commons vote on Tuesday to challenge the rise, but Reeves said the competition watchdog had been instructed to monitor fuel pump and domestic heating oil prices closely to prevent profiteering during the conflict. Both Reeves and Prime Minister Keir Starmer suggested the government may intervene to protect households from major cost-of-living shocks at the next energy price cap. Oil prices surged past $100 (£75) a barrel for the first time since 2022, although Brent crude later fell below $90 (£70) after Donald Trump indicated the conflict could end soon. Starmer acknowledged that a prolonged war would affect “the lives and households of everybody” but said the government would act to protect households if tensions continued. Meanwhile, US and Israeli warplanes carried out new strikes across Iran on Monday, with large crowds gathering in Tehran to show support for the country’s newly appointed supreme leader, Mojtaba Khamenei. The warning from Reeves comes as Brent crude reached a high of $119.50 (£89), a 29% jump, before settling back. The Bank of England is expected to keep interest rates on hold through 2026, with only a small chance of a rise in 2027. Global markets also fell due to fears of higher inflation and a prolonged conflict. The AA advised drivers to reduce non-essential travel and adopt fuel-saving driving habits. Most UK households will be protected temporarily by the energy price cap, but the country remains vulnerable because of its reliance on gas from the Middle East. About 20% of the world’s liquid natural gas passes through the Strait of Hormuz, which Iran has threatened to restrict. Iran’s security chief, Ali Larijani, said safe passage would not be restored “amid the fires ignited by the United States and Israel in the region.” Analysts suggest Iran may be attempting to pressure the US by limiting oil supply to global markets and targeting energy infrastructure, hoping to force a resolution on Tehran’s terms. UK ministers are exploring ways to reduce the impact of rising energy costs. Reeves told parliament that the economic effects “will depend of course on its severity and its duration” but said current developments are “likely to put upward pressure on inflation in the coming months.” Reeves also said the Treasury is prepared to support a coordinated release of International Energy Agency oil reserves if needed. Pressure on the chancellor is increasing. The Trades Union Congress said working people face a “Donald Trump-made cost of living crisis” and urged the government to protect households and businesses from the global shock. More than 40 Labour MPs in rural areas warned that households dependent on heating oil risk being plunged into poverty. Approximately 1.5 million UK homes are off the gas grid and not covered by Ofgem’s energy price cap. A recent report from the Labour Rural Research Group found that some rural households had experienced heating oil price increases of up to 117% in recent days. With oil prices volatile and the Middle East conflict ongoing, UK inflation could continue to rise in the coming months. The government’s approach will likely combine monitoring, potential intervention, and coordination with international partners to limit the financial impact on households. Reeves and Starmer stressed the need for careful planning to protect consumers while maintaining economic stability amid global uncertainty.