Cost of living hope as oil prices return to pre-war levels

Oil prices have returned to levels last seen just before the US-Iran war began, bolstering hopes of a respite ahead from cost-of-living pressures.

London Stock Exchange Group data, from trading in Asia overnight, showed a barrel of Brent crude for future delivery widely below the $72.48 figure last seen on 27 February.

It showed a low of $72.24 - a decline of almost 2% on the previous day which recorded a 3% fall.

The price suggests that the market is happy there are ample supplies to meet demand despite continued disruption to flows from the Middle East caused by the hostilities, which began on 28 February.

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Damage to energy infrastructure could, in some cases, take years to repair and harm export recovery in the long term.

Falls in the price of oil have picked up this week on the resumption of deliveries through the Strait of Hormuz waterway, as efforts to secure a long-term peace are ramped up.

US energy secretary Chris Wright told a forum on Wednesday that oil shipments through the strait were close to what they were before the start of the conflict.

He suggested at least 20 million barrels had exited the passage in the last 24 hours.

The tankers involved were said to include vessels that had been trapped in the Gulf since the start of the war.

Market experts credited last week's memorandum of understanding between the US and Iran for enabling the movements, which are set to be boosted by Iranian supply due to a temporary reprieve from US sanctions.

Oman has helped enable traffic through the strait by opening temporary routes close to its shores, allowing shipping to bypass areas of concern amid claims Iranian forces had laid mines during the fighting.

The surge in energy prices caused by the war were a consequence of the importance of the strait to global deliveries from the Middle East.

It would typically handle 20% of both oil and gas demand.

Oil costs have ramped up inflationary pressures in the global economy as a result.

In the case of the UK, that has been particularly felt at the fuel pumps and when booking a flight.

The energy price cap is set to rise by 13% in July to reflect big increases in natural gas costs.

But, like with oil, there are hopes the worst will be over if the 60-day truce between the US and Iran translates into a deal that can avert rising prices ahead of winter.

Data on Wednesday showed UK gas costs still 35% up in the year to date - ahead of Brent at 25%.

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The outlook, for oil costs at least, would suggest a glut is expected to set in due to supply exceeding demand.

The International Energy Agency's most recent forecast was for a big surplus next year, signalling a period of significant price weakness ahead was likely, barring any fresh market shocks.

That could come in the form of a collapse in US-Iran negotiations.

Mr Trump has let it be known that he will not accept Iranian demands for shipping to pay fees for use of the strait, but the main stumbling block is likely to be the future for Iran's nuclear programme.

(c) Sky News 2026: Cost of living hope as oil prices return to pre-war levels