Key facts
- Brent crude futures surpassed $105 a barrel amid escalating Middle East conflict.
- The conflict has led to the effective closure of the Strait of Hormuz, disrupting oil and gas supplies.
- UK natural gas prices rose above 200p a therm for the first time since late 2022.
- UK 10-year government bond yields reached their highest level since 2007.
Oil prices have surged to $105 a barrel as fears grow that the Middle East conflict will not be resolved quickly, potentially accelerating inflation. Brent crude futures climbed above $100 a barrel on Wednesday and continued to rise amid intensifying US-Iran tensions. The conflict has effectively closed the Strait of Hormuz, a critical chokepoint for oil and gas shipments from the Gulf, raising concerns about global supply. In response to rising inflation fears, UK government bond yields have reached multi-decade highs. Yields on 10-year bonds were at their highest since 2007, while 20- and 30-year yields were at levels not seen since 1998. This indicates a higher borrowing cost for the government and could impact consumer rates for products like fixed-rate mortgages. Natural gas prices have also soared, with UK wholesale prices exceeding 200p a therm for the first time since late 2022. Low storage levels in Europe ahead of winter are contributing to the price increase, although UK consumers are partially shielded by Ofgem's price cap. President Trump commented at a Republican Party convention in Texas that he did not believe the fighting would conclude until after the US mid-term elections in November.