The price of oil has jumped to $105 a barrel amid signs the conflict in the Middle East will not be resolved quickly, fuelling fears that inflation could accelerate.
With the conflict between the US and Iran in the Gulf intensifying in recent days, the cost of both crude oil and gas has been rising sharply. Brent crude went back above $100 a barrel on Wednesday and has continued to climb.
The war has led to the effective closure of the Strait of Hormuz, preventing supplies of oil and gas from the Gulf from reaching global markets.
US and UK long-term borrowing costs also surged to their highest level in decades.
Speaking at a Republican Party convention in Texas on Wednesday, President Trump said he did not think the fighting would end until after the US mid-term elections in November.
Concerns have also grown after Iran-aligned Houthi forces were reported to have seized Yemen’s port of Mokha, a key Red Sea port.
The move could elevate fears of further shipping disruptions.
The price of natural gas has also been soaring on wholesale markets. In the UK, it rose above 200p a therm for the first time since the end of 2022.
Storage levels in Europe are much lower than normal for the time of year, and the need to fill reserves ahead of the winter has helped to push up prices.
