Oil prices rise on US-UK strikes over Red Sea attacks

Oil prices jumped by 4% after the US and UK launched strikes in Yemen over recent attacks by Houthi rebels on ships in the Red Sea.

Brent crude hit $80 per barrel for the first time this year as the Iran-backed rebels vowed to retaliate against military action by Western powers.

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While the price rose, it is below highs reached when Russia invaded Ukraine.

But the UK government has drawn up scenarios suggesting further disruption could hit the economy.

The BBC understands the Treasury has modelled outcomes including crude oil prices rising by more than $10 a barrel and a 25% increase in natural gas.

On Friday, Brent Crude - the international benchmark for oil prices for much of the world - hit $80.71 per barrel before easing, while US West Texas crude increased by 2.79% to $74.03.

The UK government is concerned that ongoing attacks on shipping in the Red Sea could weigh on the UK economy, where growth remains fragile.

Higher energy prices risk stoking inflation just as it has begun to slow. Meanwhile, the cost of shipping containers on vessels has jumped, meaning that companies could choose to pass on this expense to consumers.

Prime Minister Rishi Sunak said that the attacks had caused "major disruption to a vital trade route and [higher] commodity prices".