Oil prices hit $100 a barrel for the first time since May as the escalating conflict in the Middle East reignited fears over global energy supplies.
Brent crude – the global benchmark for oil prices – rose more than 6% on Thursday following several days of increases as the US stepped up military strikes against Iran.
Prices spiked after Houthi militia in Yemen attacked oil tankers in the Red Sea, threatening a key export route that Saudi Arabia has used to bypass the Strait of Hormuz.
Gas prices have also risen steadily over the past month, with the benchmark UK gas price currently at around 150 per therm, up from around 98p at the end of June.
Oil prices had been falling following a temporary ceasefire between the US and Iran.
They dropped back to levels last seen before the US and Israel began military action against Iran on 28 February.
However, the ceasefire has failed and this week US Secretary of State Marco Rubio said the people in charge in Iran were “not ready to make a deal”.
The ongoing conflict risks pushing up inflation for many countries, including UK and the US leading to higher prices for consumers.
Higher oil prices typically lead to petrol and diesel becoming more expensive.
While drivers are affected directly, households could also see prices of other goods, such as food, increase due to businesses passing on higher transportation costs to customers.
Inflation rates have fallen in the UK and US, but questions remain whether the the slow down will prove short-lived due to the renewed conflict in the Middle East.
UK petrol prices have risen by 5p a litre in the space of two-and-a-half weeks to hit almost £1.56.
Diesel is at £1.72 a litre, on average, according to the RAC.
Average gasoline prices in the US have surpassed $4 a gallon once more, up from $3.92 a month ago, according to motorist advocacy group AAA.
Kevin Warsh, the newly-appointed chair of the US Federal Reserve, last week told Congress that the central bank had “no tolerance to persistently elevated inflation”.
US President Donald Trump had pushed Warsh’s predecessor, Jerome Powell, to cut interest rates.
Trump has made it clear he expects Warsh to fulfil his demand for reductions in borrowing costs for Americans.
But the Fed held US interest rates between 3.5% and 3.75% at Warsh’s first meeting last month. He also told Congress that he was committed to “restoring price stability” in the wake of the Middle East conflict impacting prices.
