At $105 a barrel on Thursday, Brent crude oil is now trading at a level that financial markets had not seriously expected to see again. The price crossed $100 on Wednesday for the first time in years and has not stopped climbing since. The immediate cause is the effective closure of the Strait of Hormuz — the narrow waterway through which roughly one-fifth of the world's oil supply normally passes — following the intensification of hostilities between the United States and Iran in the Gulf. With that corridor blocked, traders have been forced to price in a prolonged period of constrained supply, and energy markets have responded with alarm.

The disruption has spread well beyond crude oil. Natural gas prices on UK wholesale markets rose above 200 pence per therm this week, a level not seen since the final months of 2022. European storage facilities are reported to be significantly below their seasonal averages, and the pressure to replenish reserves before winter arrives is amplifying the upward movement in prices. Meanwhile, long-term government borrowing costs in both the United States and the United Kingdom have surged to their highest levels in decades, adding a second layer of stress to an already fragile financial environment.

The political backdrop offers little reassurance. Speaking at a Republican Party event in Texas on Wednesday, President Trump indicated that he did not expect the fighting to end before the US mid-term elections in November — a timeline that implies months of continued uncertainty. Further anxiety was triggered by reports that Iran-aligned Houthi forces had seized the Yemeni Red Sea port of Mokha, raising the prospect of additional shipping disruptions across one of the world's most heavily trafficked trade corridors.