19th August 2026
There is a familiar feeling developing in the oil market. It is not quite panic, and Brent crude has not yet returned to the extraordinary highs seen earlier in the year, but the direction of travel is becoming increasingly uncomfortable.
On Wednesday morning, Brent crude was trading above $91 a barrel after rising for a fourth consecutive session. The immediate reason is the continuing uncertainty surrounding the Strait of Hormuz, through which a substantial proportion of the world's seaborne oil normally passes. Shipping through the waterway remains severely disrupted, while the United States and Iran are giving very different accounts of whether it is effectively open.
But the oil market is now having to absorb another worrying development. Relations between Iran and the United Arab Emirates have deteriorated sharply, with the UAE announcing that it has halted trade and commercial exchanges with Iran following missile attacks which Abu Dhabi attributes to Tehran. Iran has denied responsibility. At the same time, the hopes of an early diplomatic settlement appear to be fading.
President Trump has said that there are currently no talks with Iran and none are scheduled. Iran, meanwhile, is maintaining its position over the Strait of Hormuz. The ceasefire framework has expired without producing the lasting agreement that the oil market had been hoping for.
This is why the rise in oil prices over the past few days deserves more attention than simply watching another dollar being added to the price of a barrel.
The question is becoming whether the market is starting to believe that the disruption could last much longer than originally expected.
And if that happens, the possibility of $100 oil becomes much less remote.
The psychology of $100 oil
Oil markets are driven by supply and demand, but they are also driven by expectations.
When traders believe that a diplomatic settlement is approaching, the price can fall very quickly because the risk premium built into crude disappears. We have already seen that happen during this crisis.
The opposite is also true.
When negotiations stall, shipping is threatened and governments become more directly involved in the confrontation, traders begin to price in the possibility that supplies will remain disrupted.
That appears to be what is happening now.
Brent has moved above $91 after rising more than 4% over the previous three sessions. The significance is not simply that oil has reached $91. It is that the market is doing so at a time when there is little obvious diplomatic progress to suggest that the situation will quickly return to normal.
There is, of course, no certainty that Brent will reach $100. Oil prices can turn around very quickly if a credible peace initiative emerges.
But $95 is now an entirely plausible target if tensions continue to deteriorate, and $100 could follow if there is a serious new attack on shipping or Gulf oil infrastructure, or if the disruption through Hormuz becomes even more severe.
The market does not need every barrel of oil to disappear for the price to rise dramatically. It only needs traders to become sufficiently concerned that future supplies cannot be relied upon.
That is the danger.
Why Scotland should be watching
It might seem strange that events in the Gulf should matter so much to Scotland.
After all, Scotland is itself an oil-producing nation. The North Sea remains an important part of the country's energy economy and produces substantial quantities of oil and gas.
But producing oil does not protect Scottish consumers from the international oil price.
Oil is a global commodity. The price received for North Sea production is influenced by what happens in the international market, just as the price paid by Scottish consumers for petroleum products is.
That creates an interesting contradiction.
A higher oil price can increase the value of Scottish oil production and potentially generate additional tax revenues, but at the same time it raises costs for businesses and households.
The Scottish economy can therefore gain in one part of the system while losing in another.
Recent figures underline the complexity of this relationship. Scotland's North Sea oil revenues fell by 12% in 2025–26 to £3.2 billion as lower oil prices reduced receipts. If oil prices now remain substantially higher, the fiscal picture could change again, although production levels and the taxation system mean that higher crude prices do not translate directly into an equivalent increase in public revenue.
For ordinary businesses and households, however, the immediate issue is much simpler.
They have to pay more for energy.
The first hit will be transport
The most obvious consequence of expensive oil is the price of fuel.
That is already beginning to happen. Petrol and diesel prices have been rising again as the Middle East crisis has pushed crude higher, and diesel is particularly important because it powers much of Britain's commercial transport system.
For a business, fuel is rarely an isolated cost.
A delivery company needs diesel to move goods. A tradesperson needs fuel to reach customers. A farmer needs it to operate machinery. A construction company needs it for vehicles and equipment. A fishing boat needs fuel simply to put to sea.
When crude oil rises, the extra cost therefore begins moving through the economy.
A business might initially absorb the increase because it does not want to lose customers. But if the higher price continues for several months, absorbing the cost becomes increasingly difficult.
Eventually the additional expense has to go somewhere and it can appear as higher prices, reduced profits, lower investment or a combination of all three.
That is why the oil price matters even to businesses that never purchase crude oil themselves.
Rural Scotland has an additional problem and this is where the consequences become particularly significant for areas such as Caithness.
Distance matters as a business operating in a major city may have access to several suppliers within relatively short distances. A rural business can be hundreds of miles from major distribution centres, markets or specialist suppliers.
Goods have to travel north.
Visitors have to travel north.
Businesses have to travel to customers.
Workers have to travel to workplaces.
There is simply no easy way around the geography.
A rise in fuel costs therefore has the potential to hit rural businesses disproportionately.
It can be particularly difficult for small firms because they generally have less bargaining power and thinner margins than large corporations.
A national retailer may be able to negotiate transport contracts covering thousands of deliveries. A small Highland business making a handful of deliveries has much less room to negotiate.
This is one of the reasons why an international oil shock can have a very local impact.
The oil may be trading in dollars in London or New York, but eventually somebody in Caithness is paying the delivery charge.
Fishing faces an especially difficult calculation
The fishing industry illustrates the problem particularly clearly.
Fuel is one of the unavoidable costs of fishing. A vessel cannot simply decide to use less fuel in the same way that an office might reduce its heating.
The economics of a fishing trip depend partly on the relationship between the value of the catch and the cost of getting to sea.
If marine fuel becomes substantially more expensive, some trips become less attractive.
That can have consequences beyond the fishermen themselves.
Processors, merchants, transport operators, equipment suppliers and coastal communities all depend to some extent on fishing activity.
A higher oil price can therefore become a regional economic issue rather than merely a problem for individual vessels.
Farming will also feel it
Agriculture has a similar exposure.
Modern farming is heavily dependent on machinery, and machinery depends heavily on fuel.
Tractors, combines and other equipment cannot simply be replaced overnight by alternative technologies because the economics and availability of those alternatives do not yet make that practical for many farms.
Higher fuel costs therefore feed into the cost of producing food.
But farmers are not always able to increase the prices they receive sufficiently to compensate.
That creates another pressure point in the food chain.
The supermarket customer may eventually see only a few extra pence on the price of a product, but behind that increase may be a succession of additional costs stretching from the farm through processing and distribution to the retailer.
The consumer impact could be larger than the petrol price
This is perhaps the most important part of the story.
When people hear that oil has risen from $85 to $92 a barrel, the natural reaction is to think about petrol.
But the economic impact is much wider.
Oil and energy are embedded in almost everything that moves.
A delivery van carries goods to a shop. A lorry takes products to a warehouse. A refrigerated vehicle keeps food cold. A manufacturer transports raw materials. Packaging and plastics are produced using petrochemical processes. Airlines depend heavily on jet fuel.
Higher energy costs therefore have a habit of working their way through the economy.
The Scottish Government's August Economic Bulletin already warned that inflation is expected to rise during the second half of 2026 as higher energy prices and business costs feed through into consumer prices. The Bank of England's projection was for inflation to reach around 3.2% in the final quarter of the year.
That forecast was made before the latest deterioration in the situation around Hormuz had fully worked its way through the economy.
That does not mean inflation will inevitably surge.
But it does mean there is less room for another energy shock.
Britain is already starting from an uncomfortable position
The timing is particularly unfortunate.
Businesses and households have spent the past few years trying to recover from the inflation shock that followed the pandemic and Russia's invasion of Ukraine.
Many people have only recently begun to feel that the worst of the cost-of-living crisis might be behind them.
Now there is a danger that another energy shock arrives before that recovery has properly taken hold.
Producer input prices provide an early warning.
UK producer input prices rose by 7.3% over the year to June, and the Scottish Government noted that crude oil prices had been the main driver of the annual increase, with crude oil input costs 42.3% higher over the year at that point.
The fall in oil prices during June had helped bring input-price inflation down from its May peak.
If oil now remains above $90 for a prolonged period, some of that improvement could begin to unwind.
Heating could become another concern
For households using heating oil, the consequences are particularly direct.
Heating oil prices are already considerably higher in remote rural areas than in more competitive parts of Britain. Recent August data showed prices ranging from around 91p per litre in cheaper areas to more than £1.38 in some remote rural locations.
That is a significant difference.
And it illustrates something important about national economic statistics.
An average UK energy price does not necessarily describe the reality of living in rural Scotland.
Distribution costs, lower population density and distance can all make energy more expensive.
A prolonged period of high crude prices could therefore hit some rural households considerably harder than the headline national figures suggest.
Tourism could be another casualty
Tourism is another area where the consequences may take time to appear.
Scotland depends heavily on people travelling considerable distances to reach its rural and island communities.
When fuel prices rise, the cost of the journey rises with them.
For an individual family, the difference between a holiday being affordable and becoming too expensive may not be enormous. It might be another £50 or £100 on the cost of driving north, or higher air fares because of more expensive aviation fuel.
But those additional costs can affect behaviour.
People may still take the holiday but stay for fewer nights.
They may spend less on restaurants and attractions.
They may decide against an additional trip.
For a rural economy dependent upon visitors spending money locally, those small decisions can accumulate.
Businesses could face a difficult choice
The biggest question for Scottish businesses will be how long the oil price remains elevated.
If Brent touches $95 and then falls back to $80, many businesses can probably cope.
If Brent reaches $100 and remains there for several months, the situation is very different.
Businesses can manage temporary shocks much more easily than permanent increases in operating costs.
This is why the next few weeks could matter more than the precise price of oil on any individual day.
The Scottish Government has reported signs of stabilisation in business conditions, with producer input price inflation falling from 9.3% in May to 7.3% in June and fewer businesses reporting that energy prices and inflation were causing them to consider raising prices.
That is encouraging.
But it also means that another prolonged energy shock could arrive just as some of those pressures were beginning to ease.
Could oil reach $100?
It is worth being careful here.
Nobody can say with confidence that Brent will reach $100.
Oil markets can move dramatically in either direction, and a credible diplomatic breakthrough could send prices sharply lower.
But the ingredients for another substantial rise are clearly present.
Brent is already above $91. The Strait of Hormuz remains severely disrupted. The ceasefire has expired. US-Iran negotiations appear stalled. Iran is taking a harder position, while tensions involving the UAE have added another layer of uncertainty.
If the situation deteriorates further, the market could move towards $95 relatively quickly.
A serious attack on Gulf energy infrastructure or a significant further restriction on shipping could then make $100 a realistic possibility.
And once $100 becomes the price everyone is watching, psychology changes again.
Businesses begin planning for it.
Consumers begin worrying about it.
Investors start speculating about it.
Governments begin considering what they might have to do about it.
The price itself can therefore become part of the economic problem.
Scotland cannot escape the global oil market
There is an irony at the heart of all this.
Scotland wants to reduce its dependence on fossil fuels and is investing heavily in renewable energy. Yet the transition will take time, and the economy remains deeply connected to oil.
Cars still run on petrol and diesel.
Lorries still carry goods using diesel.
Fishing boats still require marine fuel.
Aircraft still require aviation fuel.
Farm machinery still depends heavily on liquid fuels.
And businesses still depend on transportation.
The growth of renewable electricity does not immediately solve those problems.
That is why what happens in the Strait of Hormuz can still matter to a small business in Wick or Thurso.
It can affect the price of getting goods delivered.
It can affect the cost of travelling to work.
It can affect the economics of going fishing.
It can affect the price of heating a rural home.
And eventually it can affect what people have left in their pockets after paying for the essentials.
The real danger is not one expensive week
Perhaps the most important point is that Scotland could probably cope with a short-lived oil price spike.
What would be much more damaging is a prolonged period of high prices.
A week or two of expensive fuel is painful.
Six months is different.
Businesses begin changing prices. Investment decisions are postponed. Household budgets are squeezed. Inflation remains higher. Interest rates may have to remain higher for longer. Consumer confidence suffers.
That is how an international crisis can gradually become a domestic economic problem.
It does not arrive with one dramatic announcement.
It arrives through hundreds of small increases.
A little more at the petrol pump. A little more for delivery. A little more for food. A little more for a flight. A little more for a tradesman's bill.
Eventually the cumulative effect becomes noticeable.
And that is why the current oil price deserves attention.
The important question is no longer simply whether Brent can rise above $90.
It already has.
The question is whether $90 becomes the new floor.
If diplomacy suddenly succeeds, we could see oil retreat just as quickly as it rose.
But if the breakdown in relations with Iran continues, if the UAE confrontation worsens and if shipping through Hormuz remains restricted, the oil market could become increasingly nervous.
In that situation, $95 would not be particularly surprising.
And $100 would no longer look like an extraordinary prediction.
For Scottish businesses and consumers, that would be unwelcome news.
For rural Scotland, where distances are greater, alternatives are fewer and energy and transport costs can already be disproportionately high, the impact could be even greater.
The next oil shock, if it comes, may not begin in Scotland.
But Scottish households and businesses will certainly feel it.