Oil Prices Hit Four-Year High as U.S. Weighs Military Action Against Iran

TLDR

• Brent crude surged to $123 a barrel, its highest level since 2022
• Trump was briefed on new military options against Iran, including strikes and a naval blockade
• Peace talks between the U.S. and Iran have stalled after Tehran’s latest proposal
• The Strait of Hormuz remains blocked, with Iran imposing transit fees on shipping
• ING analysts warn demand destruction may be the only way to rebalance the market

Oil prices surged to a four-year high on Thursday as fears grew that the U.S. could resume military action against Iran, deepening an already serious supply disruption.

Brent crude for June delivery briefly touched $123 a barrel in early European trading, its highest point since March 2022. West Texas Intermediate futures also climbed, reaching around $108 a barrel before pulling back later in the session.

The rally came after Axios reported that President Trump was set to receive a briefing from U.S. Central Command leader Admiral Brad Cooper on new military options.

Those options reportedly included a wave of strikes on Iran, special forces operations to seize Iran’s uranium stockpile, and measures to reopen the Strait of Hormuz to commercial shipping.

The briefing follows weeks of failed peace talks between Washington and Tehran. Trump reportedly told aides that Iran’s latest proposal — to reopen the Strait and delay nuclear negotiations — showed the government was not negotiating in good faith.

The Wall Street Journal also reported that Trump instructed aides to prepare for an extended naval blockade of Iran and has been seeking international support to form a coalition to reopen the waterway.

Major U.S. allies have largely declined to assist. Trump previously criticised NATO members for not helping the U.S. and Israel militarily in the early stages of the conflict.

Hormuz Blockade Enters Third Month

The Iran conflict entered its third consecutive month on Thursday. Iran blocked the Strait of Hormuz at the start of the war and has since tightened control of the channel, imposing transit fees on ships passing through.

The U.S. Navy has also imposed restrictions on vessels linked to Iranian ports, leaving one of the world’s most critical oil chokepoints in a standoff.

The UAE announced this week it would leave OPEC, a move that could signal higher production from the country. However, analysts noted that the UAE is unlikely to raise output in the near term due to war-related disruptions.

Supply Cushion Running Low

ING estimates current supply losses at around 1.6 million barrels a day. The firm warned that the longer the disruption continues, the more the market will need to rely on demand destruction rather than inventory to stay balanced.

Brent crude turned negative later in Thursday’s session, falling 0.9% to $117 a barrel by mid-morning. The June Brent contract is set to expire on Thursday.

U.S. Central Command has reportedly prepared a plan for a “short and powerful” wave of strikes against Iran, though no decision has been made public.

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