Escalating violence in
Brent crude futures rose 2% to
The prospect of rising oil prices because of the turmoil in
"With inflation edging up in the US, there will be concerns that CPI [consumer prices index] growth might get out of hand and force the Federal Reserve to take action. This is the worst-case scenario, but markets are more than capable of focusing on that to the exclusion of all others."
Concerns that the Iraqi army, controlled by the Shia-led government, was collapsing grew after soldiers left the northern oil city of
The AA said the short-term effect on prices at pumps was likely to be small. It pointed out that when the US considered military action against
The AA said: "A short-term surge in the oil price no longer guarantees that pump prices will shoot up 8p or 10p a litre."
Opec predicted oil markets would be balanced in the second half of the year as extra production met growing demand.
Energy shares led the
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