Oil prices are up around 16% so far this year near $90 a barrel, with supply worries high given escalating Middle East tensions and tit-for-tat attacks on energy infrastructure between Ukraine and Russia.
Investors are paying attention. After all, it was an energy price surge two years ago that helped drive inflation and interest rates higher on a scale not seen in decades.
The International Monetary Fund on Tuesday described an "adverse scenario" in which an escalation of conflict in the Middle East would lead to a 15% jump in oil prices and higher shipping costs that would hike global inflation by about 0.7 percentage points.
The tightness in oil supplies, and higher prices, has been underpinned by oil producing group OPEC and other big oil producers curbing their output.
Morgan Stanley has lifted its third quarter Brent crude oil forecast by $4 per barrel to $94. With oil prices expected to stay high, we look at the fallout for world markets.
INFLATION WATCH
After U.S. inflation came in higher than expected for a third straight month in March, the spectre of inflation staying higher has returned with bets on interest rate cuts scaled back sharply.
Softening energy prices have been a principal driver of lower inflation expectations recently. Higher oil prices are seen as a threat to this trend.
A key market gauge of long-term euro zone inflation expectations, which generally track oil, on Tuesday hit its highest since December at 2.39%. The European Central Bank has a 2% inflation target.
ECB chief