Interest rates could hit 5.25% with inflation soaring to 6.2% under the worst case scenario if the conflict in the Middle East continues for a "prolonged period".
Speaking to reporters, Bank of England governor Andrew Bailey said the bank was preparing a number of options for different scenarios in the event of hostilities continuing between Iran, Israel and the US.
He warned that the longer the disruption to energy prices lasts, the more difficulty the UK economy will face.
Mr Bailey was speaking after the bank held the interest rate at 3.75%.
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