A former deputy governor of the Bank of England has warned that Britain may be approaching an energy crisis on a scale not seen since the 1970s oil shocks, as Iran’s ongoing restrictions on shipping through the Strait of Hormuz continue to push global oil prices sharply higher.
Sir Howard Davies, who served as deputy governor of the Bank of England before going on to chair NatWest Group, told BBC Radio 4’s Today programme that it was “probably right” to draw comparisons between the current situation and the devastating oil crises that destabilised Western economies half a century ago. His warning landed as Brent crude hit $116 per barrel on Monday morning – and as the government sought to reassure a nervous public that panic buying fuel or energy would be premature.
What Davies actually said – and why it matters
Davies was careful to frame his warning as a concern rather than a certainty, but the substance of what he said carries real weight. Comparing the current crisis to the 1970s is not hyperbole from a fringe commentator – it is the assessment of a former senior official at one of the world’s most respected central banks.
“In this case it could well be that supplies from the Middle East are constrained for some time and therefore we may have to live with a higher oil price – perhaps not $150, but certainly higher than the $60 it was when we started,” he told the programme.
He added that addressing the crisis would require a clear strategy: “That requires a plan to increase alternatives and also to reduce consumption, because it also looks like we may have a long-term reduction in supply.”
The significance of the 1970s comparison is not just symbolic. The 1973 oil embargo removed 4.5 million barrels per day from global supply, triggering one of the deepest recessions of the post-World War II era. US inflation hit 12.3% in 1974, up from 3.4% just two years earlier. The damage took the better part of a decade to fully resolve. Davies is warning that the mechanisms driving that crisis – a sudden, politically-motivated restriction of Middle Eastern oil – are present again today.
The Strait of Hormuz: why it matters so much
The immediate cause of the crisis is Iran’s decision to effectively blockade the Strait of Hormuz – the narrow waterway between Iran and Oman through which around a fifth of the world’s seaborne oil supply passes every day.
The Strait of Hormuz carries approximately 20 million barrels of oil per day, representing roughly 20% of global seaborne oil trade. Iran began restricting tanker access following joint US-Israel military strikes last month, and the disruption has sent shockwaves through global energy markets.
The head of the International Energy Agency, Fatih Birol, has described the Iran war’s fallout as equivalent to the two major oil crises of the 1970s and the 2022 gas crisis combined. He has called reopening the strait the “single most important” solution to the global energy crisis, and warned that damage to energy assets across the region – at least 40 facilities across nine countries have been severely damaged since the conflict began – could take considerable time to repair.
The scale of the disruption dwarfs previous energy shocks. The flow of oil disrupted by the Strait of Hormuz crisis is seven times the feared loss from Russian supplies in 2022, and 20 times the amount that was actually lost. Even if a diplomatic breakthrough were achieved today, analysts warn that global supply chains would take months to fully untangle.
How does it compare to the 1970s?
The 1970s comparison being drawn by Davies and others is both instructive and sobering. The original crisis was triggered by the 1973 Arab-Israeli war, during which Arab oil-producing countries imposed an embargo on Western nations they deemed supportive of Israel. World oil prices quadrupled within months. A second wave of disruption followed in 1979 in the wake of the Iranian Revolution.
The current situation differs in some key ways. Where the 1973 shock was concentrated on Western economies, in 2026 the most vulnerable nations are the rapidly growing developing economies of Asia, around 80% of whose oil imports pass through the Strait of Hormuz. Vietnam, for example, holds fewer than 20 days of oil reserves.
But for the UK, the crisis is very real. Global oil prices do not respect geography – when supply is disrupted at the world’s most critical energy choke point, every country that imports oil or gas feels it. And Britain, which remains heavily reliant on natural gas for heating and electricity generation, is acutely exposed to wholesale market volatility.
The impact on British households
The most direct consequence for people across the UK will be felt in their energy bills. The current Ofgem price cap is due to change again in July, and there are significant concerns that wholesale gas prices – pushed higher by the Hormuz disruption – will force the cap upward at that point, reversing some of the relief households are set to experience in the current April to June quarter.
The government is already considering targeted support for the most vulnerable households once the July cap comes into effect. A Downing Street spokesperson confirmed on Monday that ministers are fully aware of the scale of the challenge: “It’s obviously a serious conflict, as the prime minister and the chancellor have said, and they’ve been very clear that the impact of disruption to shipping and to the Strait of Hormuz is having an impact here in the UK.”
Beyond household bills, the broader economic consequences are beginning to take shape. Chemical and steel manufacturers across the UK and EU have already imposed surcharges of up to 30% to offset surging electricity and feedstock costs, raising fears of lasting damage to industrial capacity in some sectors.
Starmer urges calm – while pushing for de-escalation
Prime Minister Keir Starmer moved quickly on Monday to try to prevent any panic response from the public, following concern that fears about fuel shortages could prompt a repeat of the queues at petrol stations seen during previous supply scares.
Speaking to the media, he said the advice from energy sector chiefs was clear: “Normal use, no need to do anything other than what’s normal.” He urged members of the public to resist any impulse to stockpile or over-purchase fuel.
On the underlying cause, Starmer was equally direct about where he believes the effort must be focused: “Obviously, we are bearing down on energy costs. The single most important thing we could do is de-escalate to get the Strait of Hormuz open. That’s why I’m putting so much effort into that aspect.”
The diplomatic push to reopen the strait is now occupying a significant portion of the government’s international agenda. Britain has been working with G7 partners and the International Energy Agency – whose emergency architecture has been activated only six times since its founding in 1974, with 2026 being the latest instance – to coordinate a response to what is now officially the largest oil supply disruption in recorded history.
What happens next
The trajectory of the crisis depends almost entirely on how quickly – or slowly – diplomatic efforts to reopen the Strait of Hormuz succeed. If a negotiated resolution can be reached in the coming weeks, some analysts believe the spike in oil prices could begin to ease relatively quickly. But most are not optimistic about a swift outcome.
US government officials and Wall Street analysts are beginning to consider the prospect that oil could surge towards $200 a barrel if the disruption is prolonged, with Europe at risk of diesel shortages in the coming weeks should the strait remain closed.
For British households, the immediate message from the government is steady as she goes. But with a former Bank of England deputy governor drawing explicit comparisons to the worst energy crisis of the 20th century, the scale of what may lie ahead is becoming increasingly difficult to understate.
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