Key Highlights
- Brent crude jumped above $123 per barrel, marking the highest price point since 2022
- The Trump administration received briefings on potential military responses to Iran, including airstrikes and maritime blockades
- Diplomatic negotiations between Washington and Tehran have collapsed following Iran’s recent counter-proposal
- Iran continues to control the Strait of Hormuz, charging fees for vessel passage through the strategic waterway
- Market experts at ING suggest price-driven demand reduction may become necessary for market equilibrium
Crude oil markets experienced a sharp rally on Thursday, with prices climbing to their highest levels in four years amid mounting concerns that Washington may pursue military intervention against Iran, exacerbating existing supply constraints.
Brent crude futures for June delivery momentarily surpassed $123 per barrel during early European market hours, representing the peak price since March 2022. Meanwhile, West Texas Intermediate contracts also experienced significant gains, climbing to approximately $108 per barrel before retreating during afternoon trading.
The price surge followed reports from Axios indicating that President Trump was scheduled to attend a strategic briefing led by Admiral Brad Cooper, commander of U.S. Central Command, regarding potential military responses.
According to sources, the briefing materials included multiple scenarios: a comprehensive aerial assault campaign against Iranian targets, covert special operations aimed at securing Iran’s enriched uranium reserves, and tactical plans to restore commercial navigation through the Strait of Hormuz.
This military planning session comes after several weeks of unsuccessful diplomatic engagement between the United States and Iran. Sources close to the administration indicated that Trump expressed frustration to senior advisors, suggesting Iran’s most recent offer — which proposed reopening the Strait while postponing nuclear discussions — demonstrated Tehran’s lack of serious diplomatic intent.
Reporting from The Wall Street Journal revealed that Trump has directed his team to develop contingency plans for a prolonged naval embargo of Iran, while simultaneously pursuing international partnerships to establish a multinational force capable of securing the strategic waterway.
Key American allies have predominantly rejected participation in such operations. The President has previously expressed criticism toward NATO partners for their reluctance to provide military assistance to the United States and Israel during earlier phases of the crisis.
Strategic Waterway Closure Continues Into Third Month
The confrontation with Iran reached its third consecutive month on Thursday. Iranian forces established control over the Strait of Hormuz when hostilities began and have subsequently strengthened their grip on the passage, implementing mandatory transit charges for all commercial vessels.
The United States Navy has simultaneously implemented its own restrictions targeting ships with connections to Iranian ports, creating a bilateral blockade of one of the planet’s most vital petroleum transit points.
Market analysts at ING observed that crude oil trading has shifted “from over-optimism to the reality of the supply disruption we are seeing in the Persian Gulf.”
The United Arab Emirates made headlines this week by announcing its withdrawal from OPEC, a development that theoretically could enable increased production from the Gulf nation. Nevertheless, energy experts emphasized that the UAE is unlikely to boost output immediately given conflict-related operational challenges.
Inventory Buffers Diminishing Rapidly
ING’s current analysis estimates daily supply shortfalls at approximately 1.6 million barrels. The research firm cautioned that prolonged disruption will increasingly force markets to depend on price-induced demand reduction rather than strategic reserves to achieve balance.
“The only way to drive this would be through higher oil prices,” ING analysts stated.
Brent crude reversed course later in Thursday’s trading session, declining 0.9% to settle at $117 per barrel by mid-morning in the United States. The June Brent futures contract is scheduled to expire on Thursday.
U.S. Central Command has allegedly finalized operational plans for a “short and powerful” military campaign targeting Iranian infrastructure, though no official authorization has been announced publicly.
