The price of Brent crude rose to a one-month high of $118.59 a barrel after a calamitous Opec meeting described by Saudi oil minister Ali Naimi as "one of the worst meetings we have ever had".
Investors are concerned that the sharp rise will raise the pressure on the already fragile global recovery. After Ben Bernanke, chairman of the Federal Reserve, indicated on Tuesday that there would be no further quantitative easing, and the threat of a Greek default has become more likely, fears have been greatly compounded.
"Opec members were divided in their views on oil prices but decided not to increase production for the next quarter," said Angelos Damaskos, fund adviser at Junior Oils Trust. "Despite some members arguing that $100 per barrel oil is hurting the global economy, the cartel has decided not to increase supply."
"The decision indicates that several Opec members do not have much spare capacity to supply a market where demand from Asia continues to be strong. Oil prices are set to be supported at the $100 per barrel level for the medium-term and could rise to old highs in the future," he added.
The first uprisings in the Middle East and North Africa caused the last dramatic rise in the price of oil, which subsequently caused the US economy to slow.
However, investors and economists believe the world is now in a much more fragile position and any pricing pressure from oil could be far more disastrous.
Patrick Connolly, head of research at AWD Chase de Vere, says that oil prices will continue to be a hindrance in the future.
"The high price of oil has been a big issue for the growth of the global economy and there is nothing to indicate that it will abate," he explained.
"Continued volatility and the clear indication that there will not be a rise in production shows that the price of oil will continue to impact the global economy."
Performance of index over 1-yr
Source: Financial Express Analytics
Simon Denham, head of Capital Spreads, believes that prices could climb ever higher, amplifying the pressure on the world economy.
"It must be feared that the producing nations will actually fail to bridge the looming supply/demand gap," he said in a recent note. "As we have seen in the past, a very small supply shortfall can cause a massively disproportionate price rise."
Investors hoping to gain exposure to potential rises in the oil price can do so via a commodities fund or an exchange traded fund, said Graham Toone, head of research at AFH Wealth Management.
"We played the oil price previously through Investec Global Energy, which has a lot of exposure to the Middle East," he explained. "There is probably an ETF people can get access to but it will be derivative-based and we tend to be wary of those types of instruments."
"If the oil price goes higher then it will threaten the global recovery so it is mixed news for investors," he added.
Performance of fund over 1-yr
Source: Financial Express Analytics
According to Financial Express data, Investec Global Energy has returned 16.6 per cent over the last year.
BP has announced that it will resume plans for oil exploration in the Arctic after talks with Russian oil producer Rosneft faltered.