Oil prices rose sharply this week and reached their highest level in four months. On Friday, Brent crude oil—the main international oil price—went up to almost $110 per barrel before falling a little. This increase caused share prices to fall and made it more expensive for governments to borrow money.

The main reason for the rise in oil prices is the continuing conflict in the Middle East. Fighting between the United States and Iran has made oil shipments through the Strait of Hormuz, a very important shipping route, more difficult. There is also worry about shipping in the Red Sea after Houthi forces, who are linked to Iran, took control of the Yemeni port of Mocha.

Because oil is more expensive, inflation could increase again as transport and other costs go up. This has led investors to think that central banks, such as the US Federal Reserve and the European Central Bank, might keep interest rates high, or even raise them, to try to control inflation.