The British stock market may struggle to build on recent gains should world oil prices continue to smash record highs. The FTSE 100 index jumped by 2.04 percent or 133.4 points to end the week on Friday at 6,661.30 points.
But gains were capped towards the end of the week as the price of crude oil breached 92 dollars for the first time on rising tension in crude-rich Iran and tight energy supplies in the United States.
"Oil is the lubricant of economic expansion. A high oil price just makes it more expensive for companies to operate," explained Henk Potts, equities analyst at Barclays Wealth.
"It makes it more expensive for companies to transport goods from one place to another, and makes it more expensive for consumers to fill up their cars, and therefore they've got less money in terms of disposable income.
"It's one of the fundamental aspects that analysts look at, in terms of assessing global markets and consumers' behaviour," he added. As well as monitoring oil-price developments, investors will chew over a number of earnings updates next week from British blue chip companies. Results from Imperial Tobacco and British American Tobacco will be published along with numbers from pharmaceuticals giant AstraZeneca.
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