Oil prices jumped and stocks tumbled on Tuesday after Iran fired more than a hundred missiles at Israel in retaliation for the ground invasion of southern Lebanon. Brent crude jumped by as much as 4pc to above $74 a barrel following a warning from White House officials that a strike was imminent. It rose further, topping $75 a barrel, after Tehran launched a volley of missiles at Israel shortly before 6pm London time.
Elsewhere, global stocks tumbled and the price of gold spiked on concerns about wider escalation in the region. The pan-European Stoxx 600 index closed down 0.9pc while the S&P 500 dropped 1.
1pc on Wall Street. Gold jumped by 1.1pc to $2,668 per troy ounce, near its record high.
The Israeli Shekel fell 1pc against the dollar. The FTSE 100 was one of the few global stock indexes to register gains, buoyed by defence and oil stocks. BAE Systems, BP and Shell were all among the day’s biggest gainers.
Analysts said the moves were driven by concerns about escalation in the Middle East. David Oxley at Capital Economics said: “Much remains uncertain. A significant escalation by Iran risks bringing the US into the war, which Tehran will presumably seek to avoid.
“Assuming this is avoided, the impact on oil prices will remain the key channel of transmission to the global economy. “Iran accounts for about 4pc of global oil output, but an important consideration will be whether Saudi Arabia increases production if Iranian supplies are disrupted.” Earlier in the da.