Oil prices climbed above $100 a barrel on Thursday, marking the first time since May, as escalating tensions in the Middle East heightened concerns over global energy supplies. Brent crude, the international benchmark for oil, experienced a more than 6% increase following several days of upward momentum, coinciding with intensified US military actions against Iran.

The price spike followed attacks by Houthi militia in Yemen on oil tankers traversing the Red Sea. This route is a critical artery for energy exports, particularly for Saudi Arabia, offering an alternative to the Strait of Hormuz. The disruption threatens to impede the flow of oil and gas.

Gas prices have also seen a consistent rise over the past month. The benchmark UK gas price is currently trading around 150 pence per therm, a significant jump from approximately 98 pence at the close of June. This surge in energy costs is attributed, in part, to the breakdown of a temporary ceasefire between the US and Iran.

US Secretary of State Marco Rubio stated this week that Iranian leadership "were not ready to make a deal," signaling a lack of progress in de-escalating the situation. The renewed conflict poses a risk of further fueling inflation across numerous countries, including the UK and the US, potentially leading to higher consumer prices.

Historically, elevated oil prices have a direct impact on the cost of petrol and diesel. This not only affects drivers but can also lead to increased prices for other goods, such as food, as businesses pass on higher transportation expenses to consumers. While inflation had recently shown signs of slowing in both the UK and the US, the renewed conflict raises questions about the sustainability of this trend.

New data indicates that UK petrol prices have risen by 5 pence per litre since the start of July, reaching nearly £1.56 per litre, with diesel averaging £1.72 per litre. In the US, average gasoline prices have now surpassed $4 per gallon, up from $3.92 a month ago.

Investment managers note that more expensive fuel and energy can have a cascading effect on the broader economy, increasing operational costs for businesses and ultimately impacting the prices of everyday goods. This presents a challenge for central banks grappling with inflation.

If energy prices remain high, policymakers may face pressure to maintain current interest rates or even implement increases. Such a move could add further financial strain on mortgage holders and borrowers. The Bank of England has held its interest rates at 3.75% for its last four meetings, and analysts anticipate a similar decision at its upcoming meeting, though some expect potential rate cuts next year if energy prices stabilize.