The official price of Oman crude for May delivery surged by $13.84 on Thursday, reaching $166.96, following Wednesday's settlement of $153.12. The monthly average price for Oman crude for current March delivery stands at $62.17 per barrel, marking an increase of $0.08 compared to February.
Brent crude topped $115 per barrel as Tehran threatened to target regional installations in retaliation for an Israeli strike on a site serving its massive South Pars field, which it shares with Qatar.
Iranian missiles struck Qatar's Ras Laffan, the world's largest liquefied natural gas (LNG) hub, causing 'extensive damage'.
Drones struck a Saudi oil refinery on the Red Sea and caused fires at two others in Kuwait in the latest attacks.
World oil prices jumped and European gas rose as much as 35 per cent on fresh concerns about the impact on energy supplies of the nearly three-week-old Middle East war.
International benchmark Brent surged six per cent, after climbing more than 10 per cent earlier, while the main US oil contract WTI was up 0.3 per cent.
"The prospect of a longer, more drawn-out conflict is in sharp focus, as both sides ratchet up attacks on energy infrastructure," said Susannah Streeter, chief investment strategist at Wealth Club.
"Downbeat sentiment is spreading fast... as investors assess the repercussions for the global economy," she added.
The Frankfurt and London stock markets both shed around two per cent, while Paris was down 1.7 per cent.
In Asia, Tokyo tanked more than three per cent, while Hong Kong and Shanghai were also down.
Markets have been hammered since the start of the war, with Tehran hitting sites across the Gulf and effectively closing the Strait of Hormuz, through which a fifth of global oil and gas flows.
The surge in energy costs has fanned fears of a spike in inflation and the spectre of higher interest rates.
Central banks are in a "state of limbo while they wait to see if the Middle East crisis will trigger a long-lasting inflation shock," said Dan Coatsworth, head of markets at AJ Bell.
The Bank of England and the European Central Bank are both set to hold interest rates on Thursday, after the US Federal Reserve also kept its borrowing costs unchanged.
Concerns were compounded on Wednesday with data showing US wholesale inflation rose more than expected in February, before the war started and oil prices soared by more than 40 per cent.
Federal Reserve Chair Jerome Powell said he expected higher energy costs to boost price rises in the near term but added that little was clear at this point.
"We're right at the beginning of this,... you just don't know how big this will be and how long it lasts," he said.
The Bank of Japan held rates on Thursday and also warned it saw inflation spiking on the back of the crude surge.
That came after the Reserve Bank of Australia hiked its key rate on Tuesday, pointing to "sharply higher fuel prices". — AFP
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