Gilt yields soar as Iran close Strait of Hormuz creating global fuel crisis

15-year gilt yields chart - Based on figures for March 2026

Annuity Rates UK - March 2026 review

Standard annuities are higher by an average +2.08% due to soaring 15-year gilt yields increasing +63 basis points to 5.28% for the month of March.

The US and Israeli attack on Iran has seen retaliatory drone strikes closing Qatar liquid natural gas production which may takes years to recover previous production levels.

Iran closing the Strait of Hormuz to shipping has sent oil from $60 to a high of $108 per barrel and gas prices from 80 pence per therm to a high of 156 pence per therm.

Investors fear the impact of fuel shortages in the global economy and rising inflation which has sent gilt yields soaring to a recent record high of 5.46% on 23 March 2026.

Even if the Iran war ends soon and the Strait of Hormuz is opened, gilt yields are likely to remain higher for longer. This is due to the disruption to shipping and lower production of oil and gas from the Gulf states due to war damage. Therefore energy prices are likely to remain higher with rising inflation and fewer interest rate cuts from central banks.

As annuity rates are mainly based on 15-year gilt yields, the Bank of England is unlikely to cut base rates any time soon due to the knock-on effect of the Iran war and higher inflation in the economy.

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Providers of standard annuities increased rates by an average of +2.08% this month and we would expect rates to rise by +1.50%% in the medium term if yields remain at current levels.

For smoker and enhanced annuity providers increased their rates by an average of +1.81% and we would expect rates to rise by +2.06% in the short term if yields remain at current levels.

Fig 1 below shows the annuity rates changes for the whole market and the proportion that have either increased, decreased or or did not change. It also shows the range of the changes of the annuity rates over the last month:

Annuity Rates Changes Increase No change Decrease   97%   3%   0% Increases of: max 5.0%   Decreases of: max 0.0%

Fig 1: Annuity rate changes for the whole market

Fig 2: Change in standard rates last month compared to gilt yields

Fig 3: Change in enhanced rates last month compared to gilt yields