Shell PLC and BP PLC shares were among the biggest risers on the FTSE 100 on Monday as oil and gas prices spiked after the US and Israel carried out military strikes on Iran, sparking retaliatory rocket and drone attacks against other sites in the region.
Brent crude oil futures jumped almost 8.8% to $79.25 a barrel, the highest since the start of last year.
UK natural gas prices leapt 25% to 98.5p per therm, not far from spikes in January to 10-month highs.
Oil prices are now up 30% since last December and year-on-year positive for the first time since December 2024.
Shell shares rose 3.7% and BP's were up 2.7%.
The conflict is likely to have a "sharp but short-lived" impact on oil and gas prices, said George Lagarias, chief economist at Forvis Mazars.
"This has less to do with Iran’s productive capacity (only 3% to 5% of global production), some of which OPEC+ suggested it can quickly make up for, and more to do with the effective closing of the Straits of Hormuz," he pointed out.
He said it would be "a matter of time" before contingency plans become operational that would allow oil to flow beyond Iranian chokepoints.
Analyst James Hosie at Shore Capital said the moves in oil and gas prices reflected "uncertainty around the scale and duration of the current conflict and recognises that Iran’s political future may have major implications for the stability of the Middle East.
"Higher near-term oil prices should continue to support the share prices of oil and gas producers operating outside the region and is a fresh reminder of the value of domestic energy security."
Hosie said oil producers outside the Middle East are set to benefit from an uplift in near-term revenues and cash flow.
"We expect UK North Sea producers to continue their recent share price rallies. The shifting geopolitical landscape also strengthens their case for changes in UK Government policy to support domestic energy supplies."