The global oil price spiked upwards yesterday as fears grew of a looming conflict between Israel and Iran and constraints on supply started to bite.
Brent crude rose in trading by $2.16 to hit $115, the highest since May.
Israeli newspapers reported at the weekend that the Prime Minister, Benjamin Netanyahu, is close to ordering a military strike on Iran's nuclear facilities, and on Sunday the country's deputy foreign minister said the diplomatic effort to halt the Tehran regime's enrichment of uranium should now be declared dead. Iran has threatened to close the Strait of Hormuz, through which 40% of the seaborne world's oil supplies pass, if it is attacked by Israel.
The supply of oil has been constrained by a slowdown in North Sea production where output is set to fall by 17% next month thanks to maintenance.
The future path of oil prices is complicated by slowing demand. The Centre for Economics and Business Research (CEBR), yesterday slashed its forecast for global growth in 2013 to 2.7% down from the 3.2% it expected in April.