The price of a litre of milk. The cost of a loaf of bread. The petrol you put in your car to get to work. These are the things that matter in the real economy. And they are all, right now, hostage to a geopolitical chess match playing out in the Persian Gulf.
Donald Trump said overnight that a new Iran nuclear deal is “largely negotiated”. He is betting that a reopening of the Strait of Hormuz can bring down oil prices. For the average family in Rotherham or Paisley, that would be a relief. But we have heard such promises before. And the kitchen table does not trade on hope.
Let’s be clear. When oil prices spike, it is not just at the pump that you feel it. Every good on the shelf has a petroleum price tag. Plastics, transport, fertilisers. The cost of living crisis is a permanent guest in most households. One in five children in the North of England lives in poverty. A sustained drop in oil prices could be the difference between a warm home and a cold one this winter.
But there are reasons to be sceptical. The Strait of Hormuz is the world’s most critical oil chokepoint. Roughly 20 million barrels of oil pass through it every day. That is about a fifth of global consumption. If Trump’s deal is real, then we might see some stability. But if it is bluster – and his track record suggests it often is – then we are in for volatility. And volatility hurts the poorest most.
Let’s talk about wages. I have spoken to workers in Sunderland’s car plants and Liverpool’s warehouses. Their wages have been stagnant for a decade. Every penny extra at the pump is a penny not spent on shoes for the kids or a treat at the chippy. The Bank of England expects inflation to stay above target for months. Any relief on energy costs would be a lifeline.
But there is another angle here. Unions have been fighting for a fair share of the pie. The RMT, Unite, the GMB. They know that corporate profits have soared while wages have crawled. If oil falls, the bosses will be tempted to keep the savings. They always do. We need to ensure that any drop in input costs is passed on to workers. That is the real test of a “deal” – not the headlines, but the household budget.
We should also talk about the North Sea. If Trump’s deal floods the market with cheap Iranian oil, it could hammer our own domestic production. That means jobs in Aberdeen and the Shetlands. The transition to green energy is vital, but we cannot throw working people on the scrapheap now. A just transition means planning, not a race to the bottom.
The prime minister’s office has been quiet. That is worrying. Labour should be demanding answers. What does this mean for our energy security? What will the Treasury do if oil prices crash? Will they support the workers who lose out? Or will it be another case of the City winning and the regions losing?
I remember the 2008 crash. I remember when food bank use first started to climb. We cannot afford another period of instability. The Strait of Hormuz is 3,000 miles away, but its currents wash up on our shores. The price of oil determines the cost of bread. And that is not an abstract economic indicator. It is the difference between eating well and eating less.
So yes, if Trump’s deal is real, let’s hope it brings down prices. But let’s also hold our leaders to account. The real economy is not about grand statements. It is about the quiet dignity of a family that can afford to put a hot meal on the table. And that should be the only metric that matters.
