Oil climbs above $90 as US strikes raise Middle East tensions

Brent crude edged towards $91 a barrel on Thursday after the United States hit Iranian rocket launchers that were reportedly preparing to lay mines in the Strait of Hormuz. The attack marked the first exchange of fire in more than a month and pushed the international benchmark above the psychologically important $90 level.

Why the rally matters

The price jump comes at a time when global markets are already sensitive to supply disruptions. Higher oil costs feed directly into inflation calculations, a concern for central banks and households alike. In the United Kingdom, the latest surge has forced the energy regulator Ofgem to raise its default tariff for the final quarter of the year, adding roughly £5 a month to bills for around 22 million consumers.

“Putting diplomacy back on track isn’t possible,” said Abbas Araghchi, Iran’s foreign minister, adding that “pressure doesn’t work.”

Market reaction and forecasts

Achilleas Georgolopoulos, senior market analyst at Trading Point, said the fresh military action is nudging prices higher, but warned the rally lacks the momentum to break previous conflict‑driven peaks. He noted that expectations for progress in the US‑Oman‑Iran talks have taken another hit.

Analysis from Goldman Sachs suggests daily exports of crude and oil products from the Middle East have risen to between 15 million and 16 million barrels, still about 8 million barrels below pre‑conflict levels but well above the 5‑6 million barrels seen at the height of the earlier flare‑up.

Policy implications

In the United States, Kevin Warsh of the Federal Reserve warned that the central bank stands ready to act if inflationary pressures intensify, underscoring the link between energy markets and monetary policy.

Across the Channel, the higher price cap adds pressure on Andy Burnham, the UK’s prime minister, who has pledged to give families “breathing room” amid a cost‑of‑living squeeze. The regulator has signalled another increase is likely in January if oil prices stay elevated.

Looking ahead, analysts expect oil prices to remain volatile as diplomatic channels stay strained and any further military moves in the Gulf could reignite supply fears. Policymakers in both Washington and London will be watching the market closely, balancing inflation concerns with the political fallout of higher energy bills.

For a broader view of how rising energy costs are affecting Europe, see the report on Germany’s energy price rankings.