Oil prices climbed sharply on Thursday, reaching their highest level in four years, as escalating tensions between the United States and Iran raised concerns over prolonged disruptions to global energy supplies.
Brent crude futures rose $4.28, or 3.63%, to $122.31 a barrel in early trading, after briefly touching $126.41, the highest intraday level since March 2022. The more actively traded July contract stood at $112.49, while US West Texas Intermediate crude gained $1.46, or 1.37%, to $108.34 a barrel, its strongest level since early April.
Both major benchmarks are now on track for a fourth consecutive month of gains, reflecting sustained anxiety over supply security in the Middle East. Prices have more than doubled for Brent since the start of the year, while WTI has risen around 90%, underscoring the severity of market volatility triggered by the conflict.
Market pressure intensified following reports that US President Donald Trump will receive a briefing on potential military options against Iran aimed at forcing a return to stalled nuclear negotiations. The conflict, which began with airstrikes earlier this year, has already led to widespread disruption after Iran restricted shipping through the Strait of Hormuz, a critical route for nearly one-fifth of global oil flows.
Diplomatic efforts have made little progress, with both sides holding firm on key demands. The United States continues to push for limits on Iran’s nuclear programme, while Tehran seeks control over the strategic waterway and compensation for war-related damages.
Analysts warn that the likelihood of a near-term resolution remains low. Market strategist Tony Sycamore noted that conditions point to a prolonged disruption, with little expectation of a quick reopening of the Strait of Hormuz.
Attention is now focused on how long supply constraints can persist and whether global demand will adjust. Some analysts, including ING, estimate that high prices could eventually reduce consumption by up to 1.6 million barrels per day as industries and consumers scale back usage, though this is unlikely to fully offset current shortages.
At the same time, OPEC+ members are expected to agree on a modest production increase at their upcoming meeting, though recent changes within the group, including the UAE’s departure, have raised questions about its longer-term influence on global supply management.
Despite these developments, traders remain primarily driven by geopolitical risk. The continued closure of key shipping lanes and uncertainty over potential military escalation have left energy markets highly sensitive, with inflationary pressures spreading across fuel and transport sectors worldwide.
