UK WITHDRAWS EMBASSY STAFF FROM IRAN AS OIL PRICES SPIKE

The UK government has temporarily withdrawn embassy staff from Tehran, citing the "ongoing security situation" in the region. The Tehran embassy will continue to operate remotely. The withdrawal follows an attack by Yemen's Houthi militia on two Saudi Arabian oil tankers, the Encelia and Layla, in the Red Sea. The Houthis, who are aligned with Iran, claimed responsibility for the attacks using ballistic and cruise missiles as well as drones, and said the strikes targeted vessels that had violated a naval blockade they imposed.

One of the tankers caught fire following the assault. Iran's foreign minister warned of an "eye for an eye" response should Donald Trump proceed with threats to bomb Iranian infrastructure in retaliation for ship attacks. The US military has carried out its twelfth consecutive night of strikes against Iran, reportedly including deployment of B-1 long-range bombers. Oil prices surged above $100 a barrel for the first time in two months on Thursday, rising from $95 the previous day, as markets reacted to fears that the Houthi blockade could disrupt Saudi oil exports and that US-Iran tensions could threaten flows through the Strait of Hormuz. Market observers expressed concern that prices could reach $120 a barrel. Stock markets fell on both sides of the Atlantic, with the Nasdaq index down more than 2%.

The escalation marks a widening of Middle East conflict centred on two critical oil trade arteries. Disruptions to supply have reignited concerns about energy costs globally after years of inflation in the sector. Oil prices previously peaked at $126 a barrel in April during the conflict, before falling to lows of $71 in early July amid hopes of a ceasefire.