Singapore – Global oil prices surged on Thursday, rising by more than 7%, driven by reports that the US military was preparing to brief President Donald Trump on new military options against Iran.
These developments come amid stalled negotiations aimed at lifting the blockade on the Strait of Hormuz. This situation has raised market concerns about a new wave of disruptions to global energy supplies.
Price surge in Asian markets
During volatile Asian trading, Brent crude futures surged as much as 7.1%, reaching $126.41 a barrel, one of the highest levels since the conflict erupted in February.
Meanwhile, West Texas Intermediate crude followed suit, climbing 3.4% to $110.31 a barrel. Although prices later pared some of their gains, the overall trend remained strongly upward.
The Strait of Hormuz, a “strangling” passage, and difficult choices
Analysts attribute this sudden surge to a report published by Axios. The report states that the commander of U.S. Central Command will present President Trump with plans for a potential military operation aimed at breaking the current stalemate.
The Strait of Hormuz, through which approximately one-fifth of the world’s oil and liquefied natural gas supplies pass, is at the heart of this crisis. Its de facto closure and the resulting halt to commercial shipping have led to what has been described as “the largest energy disruption in modern history.”
Market reaction and inflationary pressures
This surge in prices adds to the pressure on a global economy already grappling with high inflation.
Traders believe that even the mere threat of “short and decisive” military strikes against Iranian infrastructure, or an attempt to seize control of parts of the Strait of Hormuz, is driving the “geopolitical risk premium” to unprecedented levels.
Amid this tense atmosphere, markets are cautiously awaiting the outcome of the military briefing scheduled for Thursday. Investors fear that any direct military escalation could lead to a permanent disruption of oil exports from the Middle East. This could push prices above $130 in the foreseeable future.
