Oil, gas and borrowing costs surge as fears over Middle East escalate

The price of oil has jumped to $105 a barrel amid signs the conflict in the Middle East will not be resolved quickly, fuelling fears that inflation could accelerate.

With the conflict between the US and Iran in the Gulf intensifying in recent days, the cost of both crude oil and gas has been rising sharply. Brent crude went back above $100 a barrel on Wednesday and has continued to climb.

The war has led to the effective closure of the Strait of Hormuz, preventing supplies of oil and gas from the Gulf from reaching global markets.

US and UK long-term borrowing costs also surged to their highest level in decades.

Speaking at a Republican Party convention in Texas on Wednesday, President Trump said he did not think the fighting would end until after the US mid-term elections in November.

Analysts said the combination of rising energy costs and higher borrowing costs was adding pressure on financial markets.

Chris Beauchamp, chief market analyst at trading platform IG, said investors were becoming increasingly concerned about the economic impact of higher oil prices.

"It feels like investors worldwide are now waking up to the crisis in oil markets," Beauchamp said. He warned that the surge in energy prices could weigh heavily on the global economy if it continues.