Oil Crisis Set to Be 'Much Worse' in April — What It Means for UK Mortgages

What's Happening With Oil Prices?

The ongoing war in Iran has already sent global oil prices soaring — and the crisis is set to get significantly worse in April 2026, according to Fatih Birol, Executive Director of the International Energy Agency (IEA).

Speaking on the "In Good Company" podcast, Birol warned: "The next month, April, will be much worse than March. The loss of oil in April will be twice the loss of oil in March. It will come through to inflation. I think it will cut economic growth in many countries."

Birol described the current energy disruption as the "biggest in history", driven by Iran's closure of the Strait of Hormuz — a critical chokepoint for global oil supplies. The IEA is considering releasing further strategic oil reserves, but Birol was blunt: "This is only helping to reduce the pain. It will not be a cure. The cure is opening up the Strait of Hormuz."

How Will This Affect UK Inflation and Interest Rates?

Higher oil prices feed directly into UK inflation through transport costs, energy bills, and the prices of goods and services. With inflation already a concern, a further oil price spike would make it even harder for the Bank of England to cut interest rates.

The Bank held rates steady at 3.75% at its last meeting in March, and the prospect of an inflation surge has already shifted industry expectations. A recent mortgage industry poll showed just 20% of respondents believe the Bank won't raise rates in 2026, with 38% expecting two increases.

An OECD report last week trimmed UK growth expectations for 2026 to just 0.7%, highlighting that Britain would be more vulnerable to a protracted Middle East conflict than any other major economy. That's because the UK is heavily reliant on imported fuel and especially sensitive to swings in energy prices.

For a detailed analysis of how the Middle East conflict is affecting UK inflation, see our earlier guide. For expert commentary, visit The Mortgage Genie.

What Does This Mean for Mortgage Rates?

If oil prices continue to rise, we can expect further upward pressure on swap rates — the wholesale benchmarks that determine how banks price fixed-rate mortgages. This has already triggered a wave of repricing across the market.

Since the conflict escalated, major lenders including Nationwide, Virgin Money and NatWest have increased fixed rates, while others have pulled deals with just hours' notice. The Bank of England reports that around 1,500 mortgage products have been withdrawn from the market.

The message from brokers and analysts is consistent: if you're planning to buy, move, or remortgage, locking in a rate sooner rather than later is the prudent move. As highlighted by The Mortgage Genie, waiting for rates to fall could prove costly if inflation forces the Bank of England's hand.

How Vulnerable Is the UK Economy?

The UK is particularly exposed to an oil price shock for several reasons:

• Heavy reliance on imported fuel — Despite North Sea production, the UK is a net energy importer and sensitive to global price swings
• Energy-intensive economy — Transport, heating, and manufacturing costs all rise when oil prices spike
• Already-elevated inflation — With CPI still above the Bank of England's 2% target, an oil shock adds fuel to an already-burning fire
• Weak growth outlook — The OECD's 0.7% growth forecast for 2026 leaves little room to absorb shocks

Birol warned that in some countries, "the rationing of energy may be coming soon." While the UK is unlikely to face rationing, the economic ripple effects — higher bills, slower growth, and tighter monetary policy — will be felt by homeowners and aspiring buyers alike.

What Should Homeowners and Buyers Do?

With the oil crisis expected to intensify in April, here are the steps you should consider:

1. Secure a mortgage rate now — Don't wait for rates to fall. In the current climate, locking in protects you for 3–6 months
2. Review your energy costs — Higher oil prices will push up household bills. Factor this into your affordability calculations
3. Consider a longer fix — A 5-year fixed rate offers stability if you expect volatility to continue
4. Protect your income — Income protection and critical illness cover are essential safety nets in uncertain times
5. Get expert advice — At The Mortgage Genie and Amazon Mortgages, we offer 100% fee-free advice across the whole market

Contact us today for a free, no-obligation consultation before April's expected price surge hits mortgage pricing.