Moves by Iran to stop sending oil to the UK and France pushed the price of crude to a nine-month high today, potentially spelling more bad news for businesses.
Iran was reacting after the European Union imposed sanctions on it amid fears it is trying to develop nuclear weapons.
Benchmark oil for March delivery was up more than 1.5 per cent to $104.92 a barrel on the New York Mercantile Exchange, its highest since May.
This helped the FTSE 100 Index to rise 0.6 per cent in early trading, with oil giant BP among the biggest risers, up nearly 2 per cent. Its shares pushed above 500p at points today, their highest level for a year.
But the escalation in oil prices spells more bad news for motorists, already struggling with record diesel prices of 143.05p per litre.