Demand destruction fears rise after Iran war drove up oil and gas prices; UK government borrowing jumps – business live

Oil and gas prices dip after Netanyahu agrees to 'hold off' attacks on Iranian gas fields
Oil and gas prices are dropping today, after Israeli prime minister Benjamin Netanyahu indicated he would hpld off on further attacks on Iran’s gas field at the request of US President Donald Trump.
The Brent crude oil price has dipped by 1.7% to $106.75 a barrel this morning. That’s rather lower than yesterday’s high of $119, but still nearly 50% higher than before the conflict began.
Gas prices are dipping too. The month-ahead UK gas prices is down 2% at 153p per therm. That’s down from a high of 180p yesterday, but still almost double levels before the Iran war began.
Continental European gas prices are down 1.9%.
This comes after Netanyahu told reporters at a press conference that Israel “acted alone” in striking Iran’s South Pars gasfield this week.
He added:
“President Trump asked us to hold off on future attacks, and we’re holding out.”
Israel has, though, been pounding Tehran with airstrikes today.
Our Middle East Crisis Live blog has all the details:
They’ve examined the economic damage that the oil market crisis is beginning to cause in Asia, and report:
Diesel has emerged as the region’s immediate choke point, with surging prices slowing both travel and freight. Governments are responding with a mix of demand management and emergency measures. Bangladesh brought forward the Eid-al-Fitr holiday and allowed universities to close early to save fuel. The Philippines and Sri Lanka instituted four‑day workweeks to curb diesel use and stretch dwindling stocks. Pakistan closed schools and shifted universities online. Officials in Thailand and Vietnam have been urged to use stairs, work from home, and limit travel, while Myanmar introduced alternating driving days to reduce road fuel demand. In parallel, authorities are intervening directly into fuel markets to stabilize fuel prices.
Other key points include:
As jet fuel approaches $200/bbl, carriers are shifting from cost management to outright service withdrawal, with many routes rendered uneconomic
In many regions, demand isn’t being reduced by choice but by the physical absence of input
Oil demand is, on average, highly inelastic in the short run because most end uses have few immediate substitutes — factory boilers rely on fuel oil, aircraft require jet fuel, and most cars still run on gasoline.
World’s energy watchdog advises emergency measures as oil prices rise
Jonathan Barrett
The world’s energy watchdog has advised governments to reduce highway speeds and encouraged workers to carpool or, ideally, work from home to combat soaring oil prices and impending fuel shortages caused by the Middle East conflict.
It has also recommended countries consider limiting car access to designated zones in large cities, by giving vehicles with odd-numbered plates access on different weekdays to those with even-numbered plates.
The International Energy Agency (IEA) has advised member countries, including Australia, the UK and the US, to take the emergency measures to curb oil demand, following the military strikes on Iran that have triggered the most significant supply disruptions in the history of the global oil market.
Britain’s government borrowed more than expected last month, new data shows.
The difference between total public sector spending and income widened by £2.2bn year-on-year in February, to £14.3bn.
That’s more than expected – the City had expected a £8.5bn deficit for the month.
It’s also the second highest February borrowing since monthly records began in 1993, behind that of 2021 during the Covid-19 pandemic.
It follows a record surplus in January, though, when a surge in tax payments boosted the government’s receipts.
So, after 11 months of the financial year, borrowing is 8.7% less than in the same 11-month period a year ago.
Today, ONS senior statistician Tom Davies says:
“Borrowing was higher than the same month last year and was the second-highest February figure on record. While receipts were up on last year, that was outweighed by a rise in spending, including the later timing of some debt interest payments.
“However, across the first eleven months of this financial year as a whole, borrowing was down, as receipts increased by more than spending.”
Introduction: Demand destruction fears rise after Iran war drove up oil and gas prices
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
Three weeks into the Iran war, investors and analysts are increasingly worried that the world economy faces ‘demand destruction’.
The jump in oil and gas price this month, as supply from the Middle East has fallen and production facilities have been attacked, leads to a remorseless logic: if supply is short, prices have to rise until demand falls.
You can’t, after all, print more molecules, a truth that has been brought home by the attacks on Iran’s massive South Pars gasfield, and QatarEnergy’s huge LNG production site.
And there are signs that demand destruction is underway, especially among energy importers.
Egypt, for example, is beginning curbing some electricity use, including by ordering shops and cafes to close earlier.
India, which has also suffered a drop in fuel imports this month, is also taking action. Refineries have been directed to maximise LPG production for household use and supplies have been prioritised for hospitals and educational institutions, leaving businesses scrambling.
Oil and gas prices are dipping this morning, but Brent crude is still trading at over $100 a barrel.
Jet fuel prices have been rising sharply this month too, leading to predictions that airlines will hike prices, subduing demand, or even cut routes.
These changes mean that oil is “dictating the tempo of global activity”, says Stephen Innes, managing partner at SPI Asset Management.
He explains:
Asia is the first to blink, as it always is when the energy complex starts to bite. Japan’s petrochemical sector is already throttling back, not as a strategic choice but as a forced response to feedstock scarcity and elevated costs. Ethylene runs are being cut, restarts delayed, and the entire chain is starting to behave like a machine that no longer trusts its fuel supply. South Korea is moving down the same path, with major producers stepping back from full capacity and even invoking force majeure, which in market language is less a legal term and more a flare shot into the sky signaling that the system is under stress. When governments begin labeling inputs like naphtha as economic security items, you know the conversation has shifted from price discovery to resource preservation.
China, which typically absorbs shocks with scale and policy cushioning, is not immune either. Refinery runs are being dialed down to conserve crude, not because demand is booming but because supply certainty has evaporated. Downstream, petrochemical operations are shutting units and suspending deliveries, effectively pulling liquidity out of the physical market. This is how demand destruction actually looks in real time.
The agenda
7am GMT: UK public sector finances for February
9:45am GMT: Speech by FCA CEO Nikhil Rathi at JP Morgan Pensions and Savings Symposium.
10.30am GMT: Bank of Russia interest rate decision