Starmer warns of inflation hit from Iran-Israel war: PM urges G7 to push for 'de-escalation' saying global economic fallout 'can't be underestimated'
Keir Starmer has warned of global economic consequences from the Iran-Israel conflict as he urged the G7 to push for 'de-escalation'.
The PM said alongside the human toll of the Middle East clashes the impact of rising oil prices should not be 'underestimated'.
The comments came as Sir Keir held talks with Italian premier Giorgia Meloni at the gathering of world leaders in Canada. The powerful group - including Donald Trump - are expected to discuss the mounting crisis as Israel vows to stop Iran developing nuclear weapons.
Rachel Reeves admitted yesterday that a 10 per cent spike in oil and gas costs and threats by Tehran to close crucial shipping routes through the Strait of Hormuz were 'cause for concern'.
Some have warned of a spike in energy prices similar to that sparked by the Russian invasion of Ukraine.
In TV interviews, the Chancellor dodged questions on whether her already-delicate spending plans would be smashed by the crisis, insisting Britain has a 'strong economy'.
A readout issued by Downing Street of the talks with Ms Meloni said: 'Discussing the situation in the Middle East, the Prime Minister urged restraint and de-escalation.
'The devastating human toll as well as the potential global economic impact caused by rising global oil prices cannot be underestimated, the leaders agreed.
Former BP boss Lord Browne has warned oil prices will 'go up a long way' if Iran shuts the Strait of Hormuz.
Deutsche Bank has suggested that such action could see Brent crude hit $125 a barrel - compared to around $74 now.
Former Chancellor Lord Hammond told Sky News that the government was not in a good position to respond to serious disruption because Ms Reeves had not rebuilt the Treasury's reserve.
Even before the Middle East flare-up, economists were warning that more tax rises looked 'almost inevitable'.
Ms Reeves was accused of laying out a 'fantasy' Spending Review last week despite the finances being under huge pressure from stalling growth, demands for more funding for defence, and Labour revolts over benefits.
Iranian politicians have been calling for the 30-mile-wide Strait of Hormuz, which links the Persian Gulf to the Arabian Sea, to be shut.
The strait, which is jointly controlled by Iran and Oman, is a vital artery for the world's fossil fuels. A fifth of all oil shipments pass through it, as well as a third of all liquified natural gas.
Closing it or disrupting the flow of ships, as Iran has threatened in the past, would strangle the supply of oil and gas on global markets, increasing the price of fuel.
A blockade would also put pressure on the British economy and people's wallets as consumers and firms absorb higher energy costs.
While it would be hard for Iran to close the strait entirely, it could disrupt oil shipments by attempting to seize tankers that strayed into its waters.
Shipping firms are already reluctant to pass through. Frontline, the world's fourth-largest oil tanker firm, is refusing contracts that use the strait.
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