For the past 20 years low oil prices have contributed to a benign inflationary environment. That may be about to change. West Texas Intermediate, the US benchmark crude, hit a record high close to $120 on Tuesday after militants attacked two pipelines in Nigeria.

The latest surge in crude prices has so far differed from past shocks. The Arab oil embargo of 1973-74 and the Iranian revolution in 1979 hit supply and triggered an inflationary spiral in industrialised nations; this time the oil price rise is primarily demand-led and fuelled by strong Asian consumption. That is less disruptive than a supply shock.