The black stuff is back down to earth. Brent crude has crashed through the floor, settling at levels not seen since before the Iran conflict rattled the markets. For the City, this is more than a footnote.
It is a signal. The benchmark slipped below $70 a barrel this morning, a drop of nearly 30% from the war-driven highs of last year. The trigger?
A combination of Saudi output hikes, a strengthening dollar, and the uncomfortable realisation that demand is not bouncing back as forecast. But for Britain, the real story is domestic. Our energy security, once a punchline, is suddenly looking robust.
North Sea production has stabilised, new LNG terminals are coming online, and the government’s fracking U-turn, however controversial, has added a sliver of supply. The result is a discount at the pump and a sigh of relief at the Treasury. Yet let us not be seduced.
Market volatility is a fickle mistress. The last time prices were this low, we were still in the EU. The giddy rush to net zero has cooled, replaced by a sober focus on affordability.
The Bank of England will take note: lower energy costs feed directly into inflation, or rather into its absence. For the Chancellor, this is a windfall. Lower petrol prices mean less pressure for handouts.
But capital flight, the silent killer of sterling, still lurks. The real test is whether this price drop is a structural shift or a temporary glitch. History says bet on the latter.
Oil has a habit of rising just when you forget to hedge.
