The price of oil has hit a six-week high amid fears over the escalating conflict in the Middle East.
The market value of the benchmark Brent crude increased to almost $80 (£61) a barrel on Monday, following last week’s gains of 9.1%.
Israel’s actions against Hamas in Gaza, Hezbollah in Lebanon, the Houthis in Yemen and the ultimate sponsors of these groups, Iran, have proved a catalyst for oil price spikes since the 7 October attack on Israel in 2023.
However, prices have been calmer in recent weeks amid concern over weakened global demand, including from China, and by markets pricing in potential risks such as further disruption to shipping from the conflict in the oil-rich region.
But the situation has now changed following Israel’s ground offensive in Lebanon.
Fears are also growing that Israel could target Iranian oil infrastructure in retaliation for rocket strikes on October 1, despite US President Joe Biden urging it not to do so.
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What’s happened to oil prices in recent years?
Brent peaked above $122 in May 2022 following Russia’s invasion of Ukraine, as the market juggled the impact of Western sanctions against the Kremlin, among other factors.
AdvertisementThe price gradually fell back from there until worries about low stockpiles in September 2023 pushed it towards $100 again – remaining sticky from there due to the cross-border attack by Hamas a fortnight later.
Brent stood at $90 this April after Iran’s first rocket attack on Israel.
But that was largely seen as a mere warning shot using inferior weaponry – more a face-saving exercise than a real attempt to cause destruction.
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What is the outlook for fuel prices?
It generally takes a couple of weeks for oil price shifts to be reflected in factory gate costs and at the fuel pumps.
In the case of petrol and diesel, in recent weeks prices have been at a three-year low. However, that may prove short-lived if increases in the price of Brent crude are sustained.