Oil back over $100 a barrel after just four days | Money News

After just four days below, the oil price is back above $100 a barrel as US President Donald Trump said the US military would blockade the key Strait of Hormuz shipping lane.

A benchmark barrel of Brent crude oil strayed close to $103 overnight as oil traders had their first opportunity to react to the latest news.

The cost is now around $101, up nearly 7%, after remaining below $100 from Wednesday to market open on Sunday evening.

Money blog: ‘I’m a travel agent – you’re wrong on five-star hotels’

That drop had been precipitated by the temporary ceasefire between the US and Iran.

But the breakdown in talks between the US and Iran over the weekend led the US to say it will begin a blockade of Iranian ports from 3pm UK time.

Share

Trump vows to blockade Strait of Hormuz

That warning of further disruption to the Strait of Hormuz, through which roughly a fifth of the world’s oil and liquified natural gas (LNG) flows, is behind the oil price rises being seen on Monday.

Similarly, UK wholesale gas costs were up more than 9% following news of the latest disruption.

Cost-of-living hits

More expensive oil and gas mean prices overall will rise.

In particular, gas prices determine household energy bills and the cost of fertiliser.

Higher energy bills and pricier fertiliser mean food production is more expensive and this can mean the cost of food goes up.

Consumers have already been impacted by the fossil fuel price spikes.

Research from the Resolution Foundation thinktank said these higher energy prices will mean the median working-age household will be £480 worse off this year than it would have been if the conflict had not taken place.

Last week, car services company the RAC said average prices of both petrol and diesel have now increased every day for the last 40 days.

Latest figures, from Friday, had said petrol increased 19% on pre-war levels while diesel was up just shy of 49% to 158.16 pence a litre for petrol and 191.31 for diesel.

The cost of home heating oil has also doubled since the end of February, going from 60.46 to 121.76 pence per litre if buying 1,000 litres, according to supplier Boiler Juice.

Market plunge

The UK’s flagship stock index, the FTSE 100, shed nearly 0.5% on the open.

The stock sell-off was clear across Europe, as the pan-European Stoxx 600 dropped just under 0.8%.