Oil prices moved higher by as much four percent on Friday after the U.S. and U.K. bombarded Iran-backed Huthi rebels with missle strikes in retaliation for attacks on ships in the Red Sea.

The price of Brent Crude, the global benchmark, spiked above $80 a barrel, to its highest price of the year, before retreating to around $79 by midmorning in New York. At 10:30 a.m., Brent was up by around two percent.

The price of West Texas Intermediate Crude, the U.S. benchmark, rose above $75 a barrel. By midmorning, the price was up by around 1.9 percent to $73.35.

Natural gas prices also rose sharply. By midmorning, the price of natural gas was up 4.7 percent after an initial rise of nearly eight percent.

AFP reports:

The oil market was in sharp focus as US and British forces struck rebel-held Yemen on Friday after weeks of attacks on Red Sea shipping by the Iran-backed Huthis, who say they are acting in solidarity with Palestinians in war-ravaged Gaza.

“The fear in the oil market is that the region is on an unpredictable escalating path, where at some point down the road supply of oil will indeed in the end be lost,” noted Bjarne Schieldrop, chief commodities analyst at SEB bank.

He noted that if the allied attacks were unsuccessful in destroying Huthi weapons, and oil tankers need to go around Africa, then up to 80 million barrels will be locked in transit — sending prices up as much as $5-10 per barrel.

The Huthis have carried out a growing number of strikes on vessels in the Red Sea, a key international shipping route, since the Gaza war erupted in October.

The attacks have affected trade flows at a time when supply strains are putting upward pressure on inflation globally.

After rising more than 4 percent — with Brent crude rising above $80 per barrel — oil prices pared gains.

The jump in oil prices sparked concerns about a fresh spike in inflation that could complicate central bank efforts to cut interest rates.

The fall in energy prices in December drove down the producer price index for the month, the Department of Labor said Monday. The index tracking so-called “final demand goods” declined 0.4 percent from a month earlier. Nearly 60 percent of that decrease can be traced to a 1.2 percent fall in energy prices. A sustained rise in energy prices from the Red Sea conflict could mean an increase in producer price inflation in January.