With the conflict in Iran driving oil prices above $100 a barrel for the first time since 2022, wealth management experts at Rathbones, one of the UK’s largest wealth and asset management groups, examine what this means for household finances and end‑of‑tax‑year planning.
Faye Church, Senior Financial Planning Director at Rathbones, says: “Developments thousands of miles away are already being felt in people’s pockets here in the UK. The escalation of the conflict involving Iran has pushed oil prices above $100 a barrel for the first time since 2022, reigniting fears about energy costs and inflation just as households were starting to see some relief.
“That rise is already feeding through to everyday finances, with mortgage rates edging higher again and the number of competitive fixed energy deals falling sharply. Higher oil prices risk keeping inflation stubbornly sticky, which in turn makes lenders more cautious and reduces the chances of cheaper borrowing costs returning any time soon.
“We’ve already had a bumpy journey back towards target inflation, and this renewed surge in oil prices risks turning that journey into a much longer and more painful detour for households. The crucial issue isn’t just how high prices go, but how long they stay there, because the UK’s household energy price cap is based on a three‑month average of wholesale prices.
“For households, this means greater uncertainty around future energy bills and potentially a longer wait for meaningfully cheaper mortgage deals.”
Fiscal outlook in flux
Faye Church adds: “It’s remarkable how quickly expectations for interest rates have shifted. Just a few weeks ago, a cut from the Bank of England looked all but nailed on. Now, markets are braced for policymakers to hold fire at the next MPC meeting as inflation risks re‑emerge.
“The conflict has also complicated the government’s economic plans, raising questions about how additional pressures - from defence spending to potential support for households facing higher energy costs can be balanced alongside the need to maintain fiscal discipline.”
Investing and end‑of‑tax‑year planning
Despite heightened market volatility, the approaching end of the tax year remains an important moment for households and investors to focus on the fundamentals of financial planning.
Isabella Galliers-Pratt, Senior Investment Director at Rathbones, says: “Market volatility can be unsettling, but it doesn’t change the fundamentals of good investing - and it shouldn’t derail sensible end‑of‑tax‑year planning. ISA and pension allowances reset at the start of the new tax year, and any unused allowance is lost, so it makes sense to use them while you can, regardless of the current market noise.
“Crucially, contributing doesn’t mean rushing into investments at the worst possible moment. Nervous investors can top up their ISA or pension now and hold the money in cash initially, giving themselves flexibility to invest gradually once markets settle, rather than trying to time things perfectly during a spike in volatility.
“History suggests periods of market stress are often followed by recovery. Sharp market falls — from the Covid‑19 pandemic to previous geopolitical shocks - have frequently been followed by recoveries and new highs. Volatility is uncomfortable, but it is a normal feature of long‑term investing rather than a signal to abandon plans.
“In fact, periods like this can create opportunity. Lower valuations may offer the potential for stronger long‑term growth for those able to stay invested, particularly within a well‑diversified portfolio that spreads risk across assets, regions and sectors.”
Practical steps households can take to build financial resilience
Faye Church says:
Stress‑testing household budgets
Reviewing how higher mortgage rates, energy bills or everyday costs would affect monthly finances, and identifying where spending could be adjusted if needed.
Maintaining a cash buffer where possible
Holding readily accessible savings can provide valuable breathing space. Having three to six months’ worth of essential living costs set aside is often considered a useful rule of thumb.
Being proactive if a mortgage deal is ending
Those approaching the end of a fixed‑rate mortgage may benefit from securing a new deal early. Many mortgage offers can remain valid for up to six months, depending on the lender, allowing borrowers to lock in a rate without necessarily committing straight away — and still switch if better deals emerge.
Be mindful of where income is taken from during market downturns
During periods of market downturns, be careful of the negative compounding effect of taking regular withdrawals. It may be worth considering an alternative income source, such as cash savings, rather than selling investments that have fallen in value, as doing so can lock in losses and make it harder for portfolios to recover.
Avoiding knee‑jerk decisions
Reacting to every headline can be costly. Whether borrowing, saving or investing, sticking to a well‑considered plan is often more effective than making sudden changes based on short‑term developments.
Keeping investments diversified
Spreading investments across different assets, regions and sectors can help reduce the impact of any single shock and smooth returns over time.
Focusing on what can be controlled
Planning ahead, keeping options open and ensuring finances are robust enough to cope with further uncertainty is far more productive than trying to predict global events.
