Oil Price Surge Triggers Interest Rate Hike Fears

The Bank of England's Monetary Policy Committee (MPC) is likely to raise interest rates in response to rising oil prices, economists warn. The UK central bank's base rate currently sits at 3.75 per cent, after reaching highs of 5.25 per cent following the Covid-19 pandemic.

Oil prices surged again as conflict escalated in the Middle East, with Brent crude increasing by three per cent to over $108 a barrel. The price rises are expected to fuel inflation and could lead to the Bank of England hiking interest rates, experts said.

The recent attack on a vital oil pipeline in Saudi Arabia has led to concerns about a prolonged supply shock. Analysts warn that 'things could get ugly very quickly' as conflict widens into Yemen.