It’s fashionable to claim, in our brave new world of electric vehicles and “net zero” targets, that oil matters less than it did in the early 1970s – when the outbreak of the Yom Kippur war between Israel and a coalition of Arab states caused a catastrophic price spike which dumped the Western world into a multi-year recession and inflationary chaos.

Yet how is oil less important given that the world economy used 50 million barrels of oil a day for vital domestic, industrial and governmental processes a half a century ago but uses twice as much today.

Last week the Chinese government published plans to promote development and investor confidence, in an attempt to counter economic slowdown – bidding up oil prices amid speculation a faster-growing world economy might use more crude.

Meanwhile, as Hurricane Milton ripped across Florida, fears about damage and disruption to US oil supply infrastructure also pushed prices up, before a realisation that the hurricane, as serious as it was, did less damage than previously feared.

In reality though, crude markets are now on a geopolitical hair-trigger. Israel has launched air strikes on the Lebanese capital of Beirut, allegedly targeting senior figures from Tehran-backed terrorist group Hezbollah. 

In Yemen, the Houthis, another Iranian proxy, continue to target vessels in the Red Sea and Indian Ocean in protest at the war between Israel and Hamas in the Gaza Strip. 

The potential for escalation is significant.

Iranian oil exports have this year climbed to near multi-year highs of 1.7m barrels daily. Chinese refiners buy most of Iran’s crude exports, with Beijing thumbing its nose at US sanctions.

Since mid-2022, the Organisation of Petroleum Exporting Countries (OPEC), led by Saudi Arabia, has been cutting production, in an attempt to keep prices firm amid relatively weak global demand.