18th July 2026
When most people hear about conflict in the Middle East, their first thought is usually the price of petrol or heating oil. For those of us in the far north of Scotland, that concern is understandable. Many homes still rely on heating oil, diesel is essential for farming and fishing, and almost everything we buy has travelled hundreds of miles by road.
But there is another consequence of war that receives far less attention. It can affect the interest rate on your mortgage.
As fighting continues in the Gulf and shipping through the Strait of Hormuz remains severely disrupted, oil prices have climbed towards $90 a barrel. Markets are asking how long the disruption will last rather than whether it exists.
If oil prices remain elevated, the effects spread far beyond the energy industry.
Higher fuel costs increase the cost of transporting food, building materials and manufactured goods. Airlines pay more for jet fuel. Farmers pay more to run machinery. Fishing boats face higher diesel bills. Delivery companies pass on increased costs. Before long, inflation begins to rise again.
Central banks such as the Bank of England have spent the past few years trying to bring inflation back under control. If energy prices begin pushing inflation higher once more, they may delay cutting interest rates or, in a worst-case scenario, even consider raising them.
That matters because mortgage rates are not determined solely by the Bank of England's official Bank Rate.
Mortgage lenders also watch the government bond market. If investors believe inflation will remain high, they demand higher returns for lending money to governments. As those government borrowing costs rise, banks also face higher funding costs, and many fixed-rate mortgages become more expensive.
This means a family in Wick and the wider county renewing a mortgage could end up paying more because of events taking place thousands of miles away.
The effects do not stop there.
Businesses borrowing to expand may postpone investment because loans become more expensive. Councils and governments face higher borrowing costs when financing schools, roads and hospitals. Even taxpayers can ultimately feel the impact as more public money goes towards servicing national debt instead of funding public services.
For rural areas such as Caithness, the impact can be particularly severe. Unlike many towns further south, there is no mains gas network covering most communities. Many households rely on heating oil, making them especially exposed to global oil markets. Long transport distances also mean higher fuel costs feed more quickly into the price of everyday goods.
No one can predict exactly where oil prices will move next. A diplomatic breakthrough could see prices fall quickly. Equally, further attacks on oil infrastructure or prolonged disruption to shipping could push prices well beyond $90 a barrel.
The lesson is simple. Modern wars are no longer fought only on battlefields. Their consequences ripple through financial markets, supply chains and household budgets around the world.
The next time you hear that oil prices have risen because of events in the Gulf, remember that the real cost may eventually appear not just at the petrol pump but also on your mortgage statement.