The flare-up around Iran is already sending sharp ripples through the UK economy, touching everything from farmers' fuel supplies to homebuyers' mortgage deals.
Even though Britain does not import Iranian gas, recent missile strikes have driven up global energy prices fast enough to affect domestic markets.
Farmers are rationing red diesel and some mortgage offers have been withdrawn as lenders reprice risk.
At the Bank of England, officials abandoned plans for an interest-rate cut that looked likely before the crisis.
Instead the central bank kept rates unchanged, saying the outlook for inflation has been pushed off course.
Bank forecasts now point to inflation rising to about 3.5% in the coming months based on midweek oil and gas prices, and could go higher if recent price spikes persist.
Financial markets reacted sharply to the Bank’s decision.
Yields on long-dated UK government bonds jumped, with investors betting on the possibility of further rate increases later this year — a swing from the expectation of cuts.
The governor warned against drawing strong conclusions from immediate market moves and stressed the Bank will monitor developments closely.
He also said the current situation is not the same as the severe energy shock seen in 2022, noting that interest rates and the economic context are different now.
Still, the disruption has already undone the likely path toward lower rates: it has pushed inflation away from target, raised government borrowing costs and forced a major repricing of fixed-rate mortgages, creating fresh strains in parts of the housing market.
Policymakers are watching the situation over the coming weeks ahead of the next Bank meeting at the end of April.
Both the governor and the chancellor have urged de-escalation, but until energy supply risks settle, the UK economy looks set to feel the effects.
The episode underlines how quickly distant conflicts can transmit through global energy markets and reshape economic prospects at home.
