Brent Crude Tops $100 for First Time Since May Amid Middle East Escalation

Brent crude oil rose more than 6% on Thursday, reaching $100 a barrel for the first time since May 2026, according to BBC News. The jump follows escalating U.S. military strikes against Iran and attacks by Houthi militia on oil tankers in the Red Sea, a critical shipping corridor that Saudi Arabia has used to bypass the Strait of Hormuz.

The price move is immediately visible at fuel pumps. UK petrol prices have risen by 5p per litre since the beginning of July, reaching almost £1.56 per litre, according to BBC News. UK diesel prices stand at £1.72 per litre on average, per the RAC. In the United States, average gasoline prices have surpassed $4 per gallon, up from $3.92 a month ago, according to AAA data reported by BBC News. UK benchmark gas prices have climbed to around 150 pence per therm, up from around 98p at the end of June, per BBC News.

The escalation follows a temporary ceasefire that had caused oil prices to drop back to pre-February levels. Oil prices had fallen after the U.S. and Israel began military action against Iran on February 28, but per BBC News, U.S. Secretary of State Marco Rubio said this week the leadership in Iran was "not ready to make a deal," signaling the ceasefire had broken down.

Inflation pressures remain even as overall rates have slowed. UK inflation fell to 2.6% in the year to June, helped by slowing diesel and petrol prices, according to BBC News. U.S. inflation has fallen to 3.5%, per BBC News. The Bank of England has held UK interest rates at 3.75% in its last four meetings. Paul Dales, chief UK economist at Capital Economics, told BBC News the Bank will "almost certainly" hold rates again, though analysts still expected interest rate cuts could come next year if energy price rises ease.

The new Fed chair, Kevin Warsh, told Congress the central bank had "no tolerance to persistently elevated inflation," according to BBC News. The Fed held U.S. interest rates between 3.5% and 3.75% at Warsh's first meeting last month, per BBC News. President Trump had previously pushed Warsh's predecessor Jerome Powell to cut rates.

Jonathan Raymond, investment manager at Quilter Cheviot, told BBC News that "more expensive fuel and energy can ripple through the wider economy, increasing costs for businesses and ultimately feeding through into the price of food and other goods."