Markets cautious as oil smashes through $120 a barrel

Oil has hit its highest level since August 2008 and has broken a new record in sterling terms, hitting £74.60 a barrel.

Brent crude has soared to $121.06 a barrel, jumping 2%, on the back of continuing unrest in the Middle East. Over the last two years sterling has fallen 17% against the dollar and in turn this has driven the oil price to a record high, reports the FT. The soaring oil price has put further pressure on the ECB to hike interest rates this Thursday, with analyst predicting a token 50 to 75 basis point rise is being priced into the market. This has resulted in European markets opening cautiously as they await interest rate decisions in Europe and the UK later this week. The FTSE has ...