📈 In General: Yes, But Not Always Immediately
Geopolitical conflicts — especially in oil-producing regions — typically increase oil prices, which can then lead to higher fuel prices in the UK. This is because:
- Crude oil is traded on a global market.
- Any perceived or actual threat to oil supply (e.g. sanctions, blockades, attacks on infrastructure) creates uncertainty, which traders price in as risk.
- The UK imports most of its oil, so changes in global prices directly affect local pump prices.
🧨 So Why Did Prices Drop During the Russia-Ukraine and Israel-Gaza Conflicts?
✅ 1. Market Expectations & Timing
Markets don’t just react to what happens — they react to what they expect to happen. If a war breaks out but doesn’t directly threaten oil supplies or shipping routes, prices might stay flat or even fall.
- Russia–Ukraine (2022):
When the invasion began, prices initially spiked due to panic and fears of major supply disruptions (especially in Europe).
But over time:- Countries adjusted their supply chains.
- Strategic oil reserves were released.
- Global demand dipped slightly due to economic slowdowns.
✅ 2. The Role of OPEC & Other Producers
OPEC (especially Saudi Arabia) can increase production to stabilise prices when there’s instability. They may also cut production to keep prices high — so wars don’t always determine direction alone.
✅ 3. Israel–Palestine (2023):
This conflict didn’t immediately threaten global oil supply routes like the Strait of Hormuz (unlike if Iran or Saudi Arabia were directly involved). So while the news was dramatic, the oil market didn’t panic, and prices held or fell based on broader economic conditions like:
- Slower global demand
- High fuel inventories
- Expectations of interest rate changes affecting demand
📉 In Summary:
| Conflict | Initial Price Impact | Why |
|---|---|---|
| Russia–Ukraine | Spike, then fall | Initial fear, followed by market adjustment |
| Israel–Palestine | No major spike | Limited impact on oil infrastructure or supply |
⚖️ Final Takeaway:
Wars can drive up oil prices if they directly threaten supply or involve major oil-producing nations. But modern oil markets are complex — they weigh supply risks against demand forecasts, political stability, and economic trends. Sometimes, prices fall despite conflict if the actual disruption risk is low or the market overreacted early.