With oil prices soaring and stock markets falling, economists warn that a prolonged conflict in the Middle East risks knocking growth worldwide and boosting prices

• Middle East crisis - live updates

Oil prices continued to surge on Monday, triggering a stark sell-off across some of the world’s leading stock markets amid growing concern that the US-Israel war on Iran could set the stage for a global economic shock.

The Middle East conflict has sparked an energy supply crisis that could risk driving up inflation and interest rates, according to economists, who believe growth is set to weaken while prices rise. Fears of stagflation – where economic activity stagnates, but inflation increases – loom large.