Oil prices jumped to their highest in more than two years yesterday after the shutdown of a North Sea pipeline knocked out significant supply from an already tightening market.

World stocks took a break from a three-day rally.

Brent crude futures, the global benchmark for oil prices, rose above $65 a barrel – their highest since mid-2015 – after Britain’s Forties pipeline was shut due to cracks as a cold snap sweeps the country.

The Forties pipeline is important for the global oil market because the crude it carries normally sets the price of dated Brent, a benchmark used to price physical crude around the world and which underpins Brent futures.

Jump in oil prices helps boost energy-heavy European stock indices

The shutdown comes as oil supply cuts by the Organisation of the Petroleum Exporting Countries (OPEC) have helped chip away an excess of inventories built up following a global supply glut which began to emerge in late 2014.

United States crude oil futures were last 0.7 per cent higher at $58.41 a barrel.

Prices of gas across Europe also soared following an explosion at Austria’s main gas transfer hub.

Meanwhile, the MSCI index of world equities, which tracks stocks across 47 countries, was flat after posting three straight days of gains.

The jump in oil prices helped boost energy-heavy European stock indices, with the pan-European STOXX index rising 0.3 per cent in London.

Europe’s oil and gas sector index hit its highest in a month.

Earlier in Asia, MSCI’s broadest index of Asia-Pacific shares outside Japan drifted off 0.3 per cent, having bounced two per cent in the past three sessions, with markets consolidating in the hope an upswing in global growth could outlast a likely hike in US interest rates this week.

Commodity-linked currencies also got a boost from the pick up in oil prices.

The Australian dollar and the New Zealand dollar were both over half a percent higher while the Norwegian crown rose 0.6 per cent.

Investors continued their policy vigil with the United States Federal Reserve set to end its two-day meeting today, while the European Central Bank and the Bank of England are scheduled to meet for the last time in 2017 tomorrow.

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