Brent crude has climbed above $100 a barrel for the first time since May, following a series of U.S. military strikes on Iran and Houthi militia attacks on oil tankers in the Red Sea.
The surge stems from concerns that disruptions in the Red Sea route—an alternative passage Saudi Arabia uses to sidestep the Strait of Hormuz—could cut oil exports and push up global prices.
Gasoline costs have also risen noticeably. In Britain the average petrol price is near 150 pence per therm, and UK litre prices have climbed to just under £1.56. In the United States, gasoline prices have surged past $4 a gallon on average.
Oil levels had dropped after a brief U.S.–Iran ceasefire, but the ceasefire collapsed when Secretary of State Marco Rubio indicated Iran was not ready to negotiate. The renewed fighting is now threatening to further inflate prices.
Higher energy costs feed into broader inflation. Britain’s inflation rate fell to 2.6% in the year to June thanks to lower petrol and diesel prices, while U.S. inflation reached 3.5%. Analysts worry the volatile Middle East situation could stall this trend.
Fuel price increases also ripple into consumer goods, raising costs for businesses and ultimately consumers. Investment manager Jonathan Raymond points out that higher energy costs may prompt central banks to keep interest rates higher.
In the UK, the Bank of England has maintained an interest rate of 3.75% for four straight meetings and is likely to hold it again, though cuts may come next year if energy prices ease. The U.S. Federal Reserve, under Chair Kevin Warsh, has reiterated that it will not tolerate persistently high inflation, even as President Donald Trump pushes for rate cuts.
For further detail on how energy prices affect broader markets, see our in‑depth analysis.
