Oil prices surged back above 100 dollars a barrel, climbing nearly 9 per cent to almost 104 dollars, as tensions in the Middle East intensified. The spike followed a pledge by the President of the United States to impose a naval blockade on the Strait of Hormuz after peace talks with Iran collapsed, raising fears of further disruption to global energy supplies.

The sharp rise in energy costs has rattled financial markets and heightened concerns that the United Kingdom is heading towards stagflation and possibly recession. Economists warned that sustained high oil prices could suppress demand across Europe and Asia, tipping the already fragile British economy into a downturn.

The International Monetary Fund is expected to cut its global growth forecasts, with the United Kingdom seen as particularly vulnerable due to stagnant growth, elevated inflation and rising unemployment. Analysts cautioned that if the blockade persists and oil prices climb towards 150 dollars a barrel, the economic fallout could deepen.

Motorists are already feeling the strain, with petrol and diesel prices rising sharply since the conflict began, significantly increasing the cost of filling a family car. While there had been brief hopes of relief at the pumps, further gains in oil prices could erase any chance of price reductions in the near term.