Oil prices surged on Thursday, settling at their highest levels in nearly four years, as Iran intensified attacks on oil and transportation infrastructure across the Middle East and vowed to keep the Strait of Hormuz closed. Brent crude settled at $100.46 per barrel, up $8.48, or 9.2%, while U.S. West Texas Intermediate (WTI) crude settled at $95.70, up $8.48, or 9.7%. Both benchmarks closed at their highest levels since August 2022.
The gains followed escalating regional disruptions. Two fuel tankers in Iraqi waters were struck by explosive-laden boats, and Iraq halted operations at its oil ports. Oman also moved vessels away from its main export terminal outside the Strait of Hormuz as a precaution.
The Strait of Hormuz, which normally carries roughly 20% of global oil supply, remains largely closed as security risks intensify. U.S. officials said naval escorts for commercial tankers are not currently possible but could become feasible later in the month.
The International Energy Agency (IEA) said the conflict is causing the largest oil supply disruption in modern market history, estimating Middle East production has fallen by roughly 10 million barrels per day, nearly 10% of global demand. Middle East refineries have also shut down about 2.35 million barrels per day of refining capacity.
Although the IEA recently approved a record 400 million barrel release from strategic reserves, analysts remain skeptical that the full volume will be deployed quickly enough to offset ongoing supply losses.
Additional risks to global energy markets are emerging as the conflict expands. Hezbollah launched its largest rocket barrage of the war, raising concerns that other regional groups could join the fighting and further disrupt shipping in both the Persian Gulf and the Red Sea.