Brent crude prices surged past $100 a barrel on Wednesday, as escalating conflict in the Middle East fuelled worries about energy-driven inflation and sent global stocks tumbling ahead of several major central bank decisions.

Brent crude futures rose as much as 3% to a session high of $100.95, breaching the symbolic price level for the first time since July 24, after Iran said it fired ballistic missiles at a U.S. base in Jordan and both sides claimed to have attacked vessels, raising worries about oil supplies from the region.

Stock markets across the globe came under pressure as the latest surge in energy prices drove concerns that higher inflation will prompt central banks to keep monetary policy tighter for longer.

U.S. stock index futures fell about half a percent, setting Wall Street indexes up for a third consecutive day of losses.

The pan-European STOXX 600 index dropped 1.5% by 1123 GMT, on course for its biggest percentage drop in two months, with economically sensitive banking and industrial stocks among the top decliners.

“$100 is a round number, a psychological number, but the break-even point of oil prices for the developed markets is much higher,” said Societe Generale multi-asset strategist Manish Kabra.

“We think crude needs to hit $150 to create a major drawback in demand cycle.”

However, Kabra cautioned that if price margins for refined products did not decline “then diesel prices go up and there tends to be a trickle-down impact on inflation and services.”

U.S. diesel prices hit a record high last week, as a global supply crunch intensified after wars in Ukraine and Iran impacted refineries in Russia and the Middle East. The fuel is widely used in trucking, agriculture and industrial activity, and higher prices could have an impact on the broader economy.

The euro edged higher ahead of the European Central Bank’s policy decision on Thursday, with markets widely expecting a hike amid inflationary pressures from the Iran war. The currency rose to a more than one-week high of $1.16493.

The yen strengthened towards the nearly seven-month high touched against the dollar on Tuesday as traders exited short positions in the Japanese currency. Expectations are building for faster Bank of Japan rate hikes and potential rush of repatriation of Japanese capital. Both Japan and the euro zone are energy importers.

Video| Oil pushes towards $100 a barrel mark:

U.S. INFLATION TEST

The 10-year U.S. Treasury yield, the benchmark for global borrowing costs, traded at 4.808%. It touched a near three-year high of 4.818% last week as traders ramped up expectations of a tighter monetary policy.

U.S. producer and consumer price reports, set to be released later this week, are seen as a real test for those bets, with policymakers looking for further evidence that inflation pressures are continuing to cool.

Traders assign close to 60% odds for a quarter-point hike ora hold from the U.S. Federal Reserve on Wednesday of next week, while being all but certain of a quarter-point increase from the BOJ two days later.

The yen strengthened around 0.4% to 153.350 per dollar, edging back towards its high of 152.89 from the previous session. It had surged around 4% over the last five sessions, with hawkish comments from BOJ officials ostensibly initiating a move that then snowballed as breaks of key levels triggered additional buying, market players said.

Sterling edged 0.1% higher at $1.3558. The Bank of England is due to announce its latest policy decision on Thursday of next week, with economists predicting the key rate will be on hold for the remainder of this year. Gold gained 1.1% to around $4,403 an ounce.