Brent crude, the international benchmark for oil, rose to $114.72 a barrel on Friday morning - its highest level since May - as mounting fears of renewed conflict in the Middle East pushed energy prices higher. The 1% increase followed threats from Tehran that it would strike oil facilities, undersea cables, datacentres and AI facilities in the Gulf region if a new US-Israeli attack was launched against Iran.
Tensions in the region escalated significantly this week. Iran's Islamic Revolutionary Guards Corps claimed to have struck four commercial ships in the strait of Hormuz on Wednesday. The US state department ordered some diplomats and the families of US government employees to leave Saudi Arabia, which has faced continued attacks from Houthi rebels in Yemen.
Richard Hunter, an analyst at the broker Interactive Investor, said the prospect of renewed military action was driving market movements. He noted that widespread reports the US is considering fresh strikes on Iran after the midterm elections, rather than pursuing diplomacy, had spooked markets. Oil had traded at around $72 a barrel in February, before the conflict began, but soared to $126 by the end of April.
Susannah Streeter, chief investment strategist at the broker Wealth Club, said fears were rising that American and Israeli forces would be ordered to launch strikes on Iran's energy infrastructure after the US elections on 3 November. She highlighted that attacks on Saudi Arabia's facilities by Houthi rebels had intensified this week, making the strait of Hormuz a dangerous route for ships with projectiles still being fired. She also pointed to Ukraine's bombardment of Russian diesel refineries as an additional factor adding to supply concerns.
For American consumers and businesses, higher oil prices typically feed through to petrol, diesel and heating costs, as well as affecting the prices of goods that rely on transport and energy-intensive production.