Oil Shock Looms as Brent Crude Surges Past $100

The price of Brent crude oil has surged to over $100 per barrel, up from just $71 in early July and marking a staggering 40% increase in less than a month.

As tensions between the US and Iran continue to escalate, oil prices have pulled back slightly but remain near triple digits. The Strait of Hormuz remains largely paralysed, with less than one-tenth of pre-war crude supplies passing through it.

The crisis has significant implications for the UK, which is a major energy importer. With expensive oil feeding directly into inflation, the government's already stretched fiscal arithmetic is under pressure. The 10-year gilt yield rose decisively above 5% last week, and borrowing costs are higher than at any point since 2007.

The national debt pile stands at almost 100% of GDP, making it increasingly difficult for the government to meet its borrowing needs. No less than 80% of what the state is borrowing is being spent on paying interest on previously issued debt.