Global oil markets recorded sharp gains as escalating tensions between the United States (US) and Iran raised fears of prolonged supply disruptions. Prices surged after President Donald Trump vowed to intensify military operations, heightening uncertainty in already volatile markets.
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Brent crude futures climbed nearly 8% to settle at $109.03 per barrel, while US West Texas Intermediate (WTI) crude jumped more than 11% to $111.54 per barrel. At one point during trading, WTI approached $114 per barrel, marking its highest level since early March and its biggest single-day price increase since 2020.
The surge comes amid growing concerns over the closure of the Strait of Hormuz, a critical route that handles around one-fifth of global oil and liquefied natural gas shipments. Iran has effectively restricted access to the waterway in response to ongoing US-Israeli strikes, prompting alarm among governments and investors worldwide.
Trump reiterated that military operations would continue over the coming weeks but did not provide a timeline for ending hostilities or reopening the key shipping route. This uncertainty has led traders to factor in a higher risk premium, pushing prices upward.
Market analysts warn that further damage to regional oil infrastructure or delays in restoring supply routes could sustain elevated prices. Some forecasts suggest crude could rise to between $120 and $130 per barrel in the near term, with the possibility of exceeding $150 if disruptions persist.
Meanwhile, diplomatic efforts are underway, with the United Kingdom hosting talks involving dozens of nations to explore reopening the waterway. However, no immediate resolution has emerged.
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As the conflict continues, rising energy costs are expected to fuel inflationary pressures and strain global economies, particularly in energy-importing regions heavily dependent on Middle Eastern oil supplies.