Oil prices climbed above $100 a barrel for the first time since July after a fresh escalation between the US and Iran in the Gulf, alongside Houthi attacks on Saudi Arabian cities, fuelled fears of further disruption to global energy supplies. Brent crude, the international benchmark, rose 2.1% following reports that the US military had "destroyed" multiple Iranian tankers after Tehran tried to strike a US navy warship with ballistic missiles, while Iran-backed Houthi forces struck four Saudi cities the previous night, wounding more than 70 people and setting oil installations alight.

The price has risen by a quarter since early August as hopes of resolving the six-month conflict faded and fighting resumed after a US-Iran memorandum of understanding collapsed. Prices had earlier peaked at $126 in April before easing on hopes of a ceasefire. UK natural gas prices have also hit their highest level in three and a half years this month, and the rise in energy costs is stoking fears of inflation and higher interest rates, with US economists expecting at least one Federal Reserve rate rise before year's end.