Mark Preston, executive trustee of the 349-year-old Grosvenor Group controlled by the Duke of Westminster, has issued one of the most striking warnings of the Iran war’s economic spillover: fertiliser shortages caused by the conflict have driven up costs for UK farmers by 50% to 70%, with a “dramatic” impact on global food prices anticipated in 2027. Preston’s intervention, reported in UK financial press on 7 May, frames the food-supply consequences of the conflict in starker terms than most policymakers have yet acknowledged.
The supply chain that runs through Hormuz
The Strait of Hormuz, through which approximately 20% of global oil traffic passes, has been effectively closed or severely restricted since late February 2026 when the Iran war erupted. Iran’s Islamic Revolutionary Guard Corps said on Wednesday the strait could “soon reopen” — but US President Donald Trump has publicly stated restrictions may remain “for months to come.” The strait carries far more than crude: it is the principal artery for liquefied natural gas (LNG) exports from Qatar, and for ammonia and urea — the primary inputs for nitrogen-based fertilisers manufactured in the Middle East. Reduced flows mean European and UK farmers must source fertiliser from more distant suppliers (the Americas, North Africa) at higher freight cost, or pay premium spot prices for what limited volume reaches the market.
Brent oil $118-126: the floor that won’t crack
Crude oil has traded between $118 and $126 per barrel through April and early May, an elevated band that has stabilised after the initial late-February spike to over $140. The Bank of England’s April Monetary Policy Report sketches scenarios from oil peaking at $108 and falling below $80 by Q1 2027, to oil staying at $130 for a year. Governor Andrew Bailey has warned that if Brent rises above $130 sustainably, the MPC will raise rates to extinguish second-round inflationary effects. UK petrol prices are up approximately 20% since the conflict began, according to weekly Department for Energy data.
Food and drink: 9% inflation looming
The Food and Drink Federation (FDF) warned that food inflation could approach 9% by the end of 2026 if the energy and supply pressures persist. The British Retail Consortium warned that disruption around the strait is increasing costs across retail supply chains, with retailers facing rising transport, packaging and energy expenses simultaneously with higher National Insurance costs and environmental levies. Ceramics manufacturers around Stoke-on-Trent separately warned that soaring energy prices combined with cheap Chinese imports threaten the future of the sector — a reminder that the war’s effects fan out beyond direct food-and-fuel channels.
The political dimension: cost-of-living returns to the front pages
The economic squeeze comes as the UK holds simultaneous local elections on 7 May across 32 London boroughs, the Scottish Parliament and the Welsh Senedd. Reform UK and the Greens are projected to benefit from cost-of-living disillusionment with the Labour government. Melanie Garson, associate professor of politics at University College London, characterised the elections as “a huge barometer for how the country is feeling about this political establishment.” If Sir Keir Starmer’s party loses over 1,000 council seats nationally, internal party critics may move against him — though expectations have been so heavily pre-managed that even a significantly bad result may already be priced in.
What history tells us about energy shocks
The 1973 OPEC oil embargo and the 2022 Russian gas crisis both produced UK inflation episodes that took years to fully unwind. The Bank of England‘s preferred lesson is that early monetary tightening, even at the cost of recession, prevents inflation expectations from de-anchoring. Critics argue that hiking rates in response to a supply shock punishes households for events outside their control. The MPC’s April vote — eight to hold, one for a hike — reflects this debate. The next decision point is 11 June 2026, by which time the spring CPI prints and the trajectory of the conflict will determine whether Bailey moves above 3.75% for the first time since the 2024 cycle peaked.
Investor positioning: defensives, energy, gold
UK equity investors have rotated into defensive sectors and energy. The FTSE 100, last seen at 10,197.85 before the early Spring Bank Holiday closure on 4 May, remains near the upper end of its annual range thanks to its heavy energy-sector weighting (Shell, BP). The 10,000-point level is the key psychological support. Sterling has been pressured by the inflation-import dynamic. Gold has rallied to multi-year highs as a hedge against geopolitical risk and currency debasement. For UK retail investors, advisers recommend a balanced approach: maintaining cash buffers at high savings rates while keeping equity exposure to sectors with pricing power.
