Surging oil prices have raised fresh fears over inflation as chancellor Rachel Reeves tries to tackle soaring borrowing costs.
Brent crude climbed 2.4% on Monday, hitting more than $81 - its highest level in the past six months - following new sanctions on Russian oil announced by the US last week.
The Telegraph reports the development comes as Reeves is already under pressure over bond markets with investors put off by Britain's rising inflation and slow growth.
Long-term borrowing costs hit a 27-year high this week, with the latest inflation figures on Wednesday anticipated to reveal prices increased by 2.6% in the year up to December.
Susannah Streeter of Hargreaves Lansdown told The Telegraph: “Inflation concerns are set to be exacerbated with a jump in oil prices, which is set to filter through to costs at the pumps.”
David Morrison of Trade Nation added: “Crude oil certainly looks as if it has finally broken out above its long term downtrend which has kept prices suppressed since September 2023, or even going back to March 2022 when it peaked after Russia’s invasion of Ukraine.”
He went on: “Fundamentally, crude is getting a boost from the cold weather across Europe and parts of the US.
“It is also getting a lift from fresh US sanctions on Russian oil sales. The energy sector is getting an overdue lift now, as oil and natural gas heads higher following a long period in the doldrums.”
FTSE 100
The UK's flagship share index, the FTSE 100, was down 26-points at 8,222 shortly after opening this morning.
Brent crude oil futures were up 0.60%, trading at $80.52 a barrel.
Companies reporting today
Games Workshop Group | Half Year Results |
Grafton Group | Q4 Trading Statement |
Hunting | Q4 Trading Statement |
Integrafin | Q1 Trading Statement |
JD Sports* | Trading update |
Ocado* | Q4 Trading Statement |
Persimmon* | Q4 Trading Statement |