Oil prices have risen sharply following reports that the US is preparing for an ‘extended’ blockade of Iran.
At the close of equity trading in London Brent crude was trading at $117.64 a barrel, the highest price so far this month.
A number of energy executives met President Trump following the announcement of a further squeeze on Iran’s economy.
Iran has shown no inclination to submit to US presure and said it will continue to disrupt traffic travelling through the Strait of Hormuz which usually carries about a fifth of the world’s supply of oil and liquid natural gas.
Danni Hewson, financial analyst at investment platform AJ Bell, said: “The longer oil prices persist at these levels, the more likely inflationary pressures become entrenched in the global economy and force central banks to switch focus from a gradual easing of monetary policy towards rate hikes to contain rising prices.
Lindsay James, investment strategist at Quilter, said that the impact of the war so far in the UK has been largely limited to higher petrol and diesel prices, but “every day that passes without a resumption of supply sees the risk of physical shortages and steeper price rises on a range of goods increasing”.
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