The price of oil has jumped to $105 a barrel amid signs the conflict in the Middle East will not be resolved quickly, fuelling fears that inflation could accelerate.

With the conflict between the US and Iran in the Gulf intensifying in recent days, the cost of both crude oil and gas has been rising sharply. Brent crude went back above $100 a barrel on Wednesday and has continued to climb.

The war has led to the effective closure of the Strait of Hormuz, preventing supplies of oil and gas from the Gulf from reaching global markets.

US and UK long-term borrowing costs also surged to their highest level in decades.

Speaking at a Republican Party convention in Texas on Wednesday, President Trump said he did not think the fighting would end until after the US mid-term elections in November.

Analysts said the combination of rising energy costs and higher borrowing costs was adding pressure on financial markets.

Chris Beauchamp, chief market analyst at trading platform IG, said investors were becoming increasingly concerned about the economic impact of higher oil prices.

"It feels like investors worldwide are now waking up to the crisis in oil markets," Beauchamp said. He warned that the surge in energy prices could weigh heavily on the global economy if it continues.

Concerns have also grown after Iran-aligned Houthi forces were reported to have seized Yemen's port of Mokha, a key Red Sea port.

The move could elevate fears of further shipping disruptions.

The price of natural gas has also been soaring on wholesale markets. In the UK, it rose above 200p a therm for the first time since the end of 2022.

Storage levels in Europe are much lower than normal for this time of year, and the need to fill reserves ahead of winter has helped push prices up.

UK consumers are protected from short term spikes on the wholesale gas markets by Ofgem's price cap. But if prices remain high for an extended period, households still face steeper bills.

The cap is already due to increase by 3.6% at the start of October, with the next change after that coming in January.

The increase in energy costs has in turn raised fears of a spike in inflation, and this has also pushed up yields on government bonds around the world.

In the UK, yields on 10-year bonds were at their highest since 2007 today, while those on 20- and 30-year bonds were at levels not seen since 1998.

This implies a higher cost of borrowing for the government, at a time when public finances are under pressure.

But it could also have a direct impact on households as well, as it affects the rates paid by consumers for some financial products, such as fixed-rate mortgages.