Brent crude prices jumped 5% to $109.80 a barrel after Saudi Arabia closed an oil pipeline due to a drone attack from Iran-backed groups, cutting 4mn barrels daily from supply. US diesel prices hit record levels above $6 a gallon, while European gas surged to four-year highs amid low storage. The crisis, driven by Middle Eastern disruptions and Ukrainian attacks on Russian refineries, is pushing inflation and 10-year Treasury yields above 5%.

The Trump administration has released strategic reserve oil, relaxed shipping rules, and pushed producers to increase output, but cannot offset 2.6bn barrels lost from the Middle East between March and August. S&P Global Energy warns 'winter is coming for diesel' due to low inventories and scarce refining capacity. Analysts doubt any Ukraine-Russia energy ceasefire agreement will last.

The focus now turns to Trump's unprecedented 100-year oil deal with Venezuela, giving the US control of 65bn barrels of Venezuelan crude and a 35% stake in North American Blue Energy Partners.