Oil prices in China surged to record highs on Wednesday, with Shanghai futures trading at $129 a barrel, surpassing the previous peak of $121.80 set during the early Iran war. The 14 per cent jump since last week follows attacks by Iran-backed militias in Iraq on Saudi Arabia's East-West pipeline, a critical export route to the Red Sea. The disruption has rippled globally, pushing ultra-low sulphur diesel to a record $221 a barrel in New York and spot Brent crude to $146 a barrel.

Analysts warn the Red Sea is now a "hot war zone," with flows unlikely to return fully. Saudi Arabia has cancelled or delayed cargoes to European refiners, and Energy Aspects estimates a global shortfall of 5mn barrels a day. China, the world's largest crude importer, had cushioned markets by cutting imports to 7.1mn b/d in June from over 12mn b/d pre-war, but is now returning to the market.

Independent refineries, key buyers of Iranian crude, face mounting pressure as inventory buffers dwindle.