Oil prices surpass 90 dollars a barrel after fresh attacks in US-Iran war

Susannah Streeter, chief investment strategist at Wealth Club, said: “The upsurge in fighting in the Middle East has caused fresh jitters across global markets.

“Japan’s Nikkei plunged more than four per cent, and the uneasiness has spread into Europe.

“London’s FTSE 100 has opened lower as fresh worries about tense geopolitics and higher energy prices collide with the uncertainty surrounding the new Burnham administration, and what future policy direction will mean for the UK economy.

“Brent crude has set off on a hot streak, trading around $90 a barrel as military action has intensified between the US and Iran. That’s an increase of 30 per cent from lows seen earlier in the month.

“Already the latest attacks have expanded beyond military targets, with bridges, utilities, and port facilities coming under attack, and the countdown is on to an even wider escalation, given that President Trump has vowed to increase attacks on Iranian infrastructure on Wednesday.

“This could trigger further retaliation, ensnaring the region in an even more complex situation. Iran has called on Houthi rebels to close the Bab el-Mandeb strait on the Red Sea oil route if the US carries out its threat.

“The conflict appears to be becoming more fractious by the day, and with Iranian forces launching fresh attacks on what it considers to be US allies across the region, restoring longer-term stability looks to be an ambition increasingly out of reach.

“Markets are still clinging to the hope that political pressure could eventually push President Trump towards a deal.

“Operation Epic Fury has become increasingly unpopular at home, and with the midterm elections on the horizon, there are expectations that the White House will look for an exit ramp.

“But Trump has built much of his leadership around projecting strength, and with Iran using the Strait of Hormuz as leverage, any sign of retreat risks looking like weakness. For now, that may make a negotiated settlement harder to achieve.”