Oil prices have risen above 100 dollars a barrel for the first time since July after the latest round of strikes in the Iran war.
US officials said on Tuesday night that multiple Iranian oil tankers had been struck in response to more attempted missile attacks on a Navy warship.
Traders in the financial markets reacted to tensions flaring up again and the price of Brent crude oil was rising by about 2% on Wednesday.
Brent crude briefly surpassed 100 dollars a barrel in the morning, reaching highs not seen since late July, before dipping to around 99.50 dollars a barrel.
The latest strikes in the Middle East show fighting between the US and Iran continues to escalate after more than six months of war, weighing on hopes among investors that a peace deal can be reached this year.
Rising oil costs and disruption to supplies are also influencing fuel prices, which have gone up further in recent days.
Petrol at the pump has risen by 4.4p a litre and diesel by 4.1p a litre since September 1, according to the AA.
The latest data showed that, on Tuesday, petrol averaged 166.2p a litre and diesel averaged 187.7p a litre at UK forecourts.
Richard Hunter, head of markets at Interactive Investor, said: “The outlook in the Middle East has recently worsened once more, with any signs of detente looking elusive.
“Fresh fighting in the region has seen Iran targeting a US base in Jordan as retaliation for US strikes on some of its oil tankers, while Iranian-backed Houthis struck several cities in Saudi Arabia.
“Such focus comes at a time when consumers could be affected by the lack of supply as the colder seasons approach.
“This adds another level to the inflationary concerns which have blighted investor thinking over recent weeks.”
Susannah Streeter, chief investment strategist at Wealth Club, said: “Far from showing signs of resolution, the conflict in the Middle East appears to be becoming more entrenched, creating chronic supply concerns around crude and gas, while intensifying trade battles threaten to push up the cost of goods just as central banks are trying to get inflation under control.
“Given the sustained impact of higher energy prices, the worry is that firms will have little choice, other than to raise prices, which risks creating another inflationary spiral.”
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