Global oil prices jumped after Israel said it had struck Iran in a dramatic escalation of tensions in the Middle East.

The price of the benchmark Brent crude rose more than 10%, reaching its highest level since January, before losing some gains.

Traders were concerned that a conflict between Iran and Israel could disrupt supplies coming from the energy-rich region.

The cost of crude oil affects everything from how much it costs to fill up your car to the price of food at the supermarket.

After the initial jump, oil prices eased a little. But Brent crude still ended the day more than 7% higher than Thursday’s closing price, trading a $74.23 a barrel.

Despite Friday’s moves, oil prices are still more than 10% lower than where they were at the same point last year. They are also well below the peaks seen in early 2022 following Russia’s invasion of Ukraine, when the price of crude soared well above $100 a barrel.

Share prices fell across Asia and Europe on Friday. Japan’s Nikkei share index ended the day down 0.9%, while the UK’s FTSE 100 index closed 0.39% lower.

Stock markets in the US also closed down. The Dow Jones Industrial Average fell 1.79% while the S&P 500 was down 0.69%.

So-called “safe haven” assets such as gold and the Swiss franc made gains. Some investors see these assets as more reliable investments in times of uncertainty.

The gold price hit its highest level for nearly two months, rising 1.2% to $3,423.30 an ounce.

Following Israel’s attack, Israeli Defence Forces (IDF) said Iran had launched around 100 drones towards the country.

Analysts have told the BBC that energy traders will now be watching how much the conflict worsens in the coming days.

“It’s an explosive situation, albeit one that could be defused quickly as we saw in April and October last year, when Israel and Iran struck each other directly,” Vandana Hari of Vanda Insights told the BBC.

“It could also spiral out into a bigger war that disrupts Mideast oil supply,” she added.

Analysts at Capital Economics said that if Iran’s oil production and export facilities were targeted, the price of Brent crude could jump to around $80-$100 a barrel.

However, they added that such a spike in prices would encourage other oil producers to increase output, ultimately limiting the price rise and the knock-on effect on inflation.

A spokesman for UK motoring body the RAC, Rod Dennis, said it was “too soon” to say what impact the latest rise in oil would have on petrol prices.

“There are two key factors at play: whether higher wholesale fuel prices are sustained over the coming days and, crucially, the sort of margin retailers decide to take,” he said.

In an extreme scenario, Iran could disrupt supplies of millions of barrels of oil a day if it targets infrastructure or shipping in the Strait of Hormuz.

The strait is one of the world’s most important shipping routes, with about a fifth of the world’s oil passing through it.

At any one time, there are several dozen tankers on their way to the Strait of Hormuz, or leaving it, as major oil and gas producers in the Middle East and their customers transport energy from the region.

Bounded to the north by Iran and to the south by Oman and the United Arab Emirates (UAE), the Strait of Hormuz connects the Gulf with the Arabian Sea.

“What we see now is very initial risk-on reaction. But over the next day or two, the market will need to factor in where this could escalate to,” Saul Kavonic, head of energy research at MST Financial said.

Additional reporting by Katie Silver