Global crude oil prices surged past the $125 mark on Thursday, reaching levels not seen since 2022, driven by escalating tensions between the US and Iran.
Key Price Movements
- Brent Crude: The global benchmark saw a significant increase, rising over 12% early Thursday and briefly touching $126 per barrel.
- WTI Crude: The US benchmark also climbed, increasing by more than 3% to surpass $110 per barrel.
- US Gas Prices: The national average price for gasoline in the US reached a four-year high, reported by AAA data at approximately $4.23.
Drivers of the Price Spike
The latest volatility stems from the breakdown of face-to-face negotiations between the United States and Iran. This breakdown has severely impacted critical global energy routes.
- Strait of Hormuz: The Strait, a vital channel for oil and gas shipping, remains effectively shut down.
- Supply Disruption: Daily transits through the strait have reportedly dropped to near zero since the conflict began in late February. The International Energy Agency (IEA) has characterized this situation as the "largest supply disruption in history."
Political Developments
Sources familiar with the discussions indicated that President Donald Trump expressed a desire to extend the US naval blockade on Iranian ports. Furthermore, his team reportedly began preparations for a more prolonged closure of the Strait of Hormuz.
Market Trading Notes
- As the June Brent contract was set to expire on Thursday, trading activity shifted focus to the July futures contract, which was noted to have risen above $113 a barrel by Wednesday night.
