Brits could face the highest ever pump prices as the Middle East crisis sends energy bills spiralling.

Experts have warned that petrol could hit £2 a litre for the first time, amid a staggering spike in global oil costs.

Keir Starmer is desperately trying to calm fears of another 2022-style cost of living squeeze, hinting at another bailout despite the fragile state of the government’s finances. He is also scrambling to limit damage to the Special Relationship from his refusal to back Donald Trump’s decision to launch the war on Iran.

The president has dismissed the soaring oil and gas prices saying they are a ‘small price to pay’ for taming Tehran.  

The price of a barrel of oil has rocketed over $100 for the first time in years, with supplies threatened by attacks on infrastructure of major producers in the region.

Iran has also managed to effectively shut the Strait of Hormuz, through which around a fifth of the world’s oil travels. 

Analysts say there is a real risk the oil price will reach $150 a barrel, with estimates that would mean £2 a litre petrol for British drivers. The previous record was 191.4p in 2022, and they are currently running around 140p.

An emergency meeting of the G7 has been called for today, where Rachel Reeves will join other ministers discussing options including the release of oil reserves.

The FTSE 100 dropped more than 100 points on opening this morning, having lost well over a month of gains since the crisis erupted nine days ago. 

Iran’s Revolutionary Guard has threatened to ‘set ablaze’ any Western tanker that attempts to navigate the strait, and hundreds of ships laden with oil, as well as liquefied natural gas, have amassed either end of it.

Iraq and Kuwait have begun cutting output, with the UAE and Saudi Arabia expected to follow suit as they run out of oil storage.

For the first time since war broke out, the effect of this disruption was felt reflected acutely in the markets, when the price of a barrel of Brent crude shot up almost 24 percent.

It took just a minute for the price to rise by 10 percent, and 15 minutes for another 10 percent, seeing it surge beyond the $100 mark for the first time since the early days of Russia’s invasion of Ukraine in 2022.

Petrol prices at the pump are also likely to spike as the higher cost filters through to consumers.

Oil reserves are co-ordinated by the International Energy Agency (IEA), with 32 members of the group holding stocks as part of a collective emergency system designed to mitigate oil price crises.

Three G7 countries, including the US, have so far indicated their support for a possible joint release, according people familiar with the talks, the FT reports.

US President Donald Trump acknowledged the economic shockwaves that the conflict is having, but insisted temporary price rises are a small price to pay for eliminating Iran’s nuclear threat.

Last week, the markets had remained relatively relaxed about impact on the oil supply.

But escalations over the weekend, alongside scenes of destruction of energy infrastructure both in Iran and across the Gulf, spooked them this morning.

A slump in the stock market also deepened on Monday, with the S&P 500 and Stoxx Europe 600 sliding 1.6 percent and 2.1 percent respectively.

And Fears emerged yesterday that Britain was also in trouble over its stocks of natural gas.

Figures suggested that, in a worst-case scenario, the country could have just two days’ worth of demand stored up.

Reserves dwindled from 18,000 GWh last year to the current 6,700 GWh, enough for just 1.5 days of demand, according to new data published by National Gas. There is a similar quantity stored as liquefied natural gas (LNG).

Meanwhile, Iran on Sunday named Mojtaba Khamenei to succeed his father Ali Khamenei as Supreme Leader. 

This signals that, a week into the conflict, regime hardliners still wield control over the country.

Announcing the news, Iran’s foreign ministry said: ‘The selection of the new leader of the Islamic revolution at a time of grave challenge will reinforce national unity and safeguard the country’s independence, sovereignty and territorial integrity.’

US Defense Secretary Pete Hegseth last night guaranteed Iran will ‘surrender’ and President Donald Trump will set the terms of their defeat.

Hegseth sat down for an exclusive interview with CBS News’ ’60 Minutes,’ where he was asked what the president meant by his demand for an ‘unconditional surrender.’

‘It means we’re fighting to win. It means we set the terms,’ the Defense Secretary replied.