The US said it would blockade Iranian ports for as long as Tehran continues to threaten vessels that try to use the Strait of Hormuz, severely disrupting global energy shipments.
Iran retaliated against US-Israeli airstrikes by threatening to attack ships in the waterway, through which about a fifth of the world’s energy usually passes.
Oil prices had surged by 6% on Wednesday following reports that Washington was preparing for an “extended” blockade of Iran.
“It does seem as though escalation in the war is back on the table, be it in the guise of the US continuing its blockade in Iran, but also reports and rumours that in order to get out of this bind, Iran may start to strike again,” said Naveen Das, senior oil analyst at Kpler.
He told the BBC’s Today programme an oil price approaching $125 is the point where businesses and politicians “start to get a bit more jittery”.
“We might start seeing maybe more headlines of trying to de-escalate again,” he added, because the increase in prices “has a knock-on effect not only on oil, but oil-related products, inflation and basically every factor of our day-to-day lives”.
Susannah Streeter, chief investment strategist at Wealth Club, said costs could remain high into next year.
“Urea shipments, used for fertiliser, are blocked and costs have rocketed for farmers around the world, who didn’t buy stocks in advance.
“The worry is that all these costs will be passed on through supply chains, pushing up the price of everyday goods, later in the year and into next year.”
