Oil prices surged on Thursday in highly volatile trading, as renewed concerns over prolonged supply disruptions followed signals that U.S. military operations against Iran would intensify. Brent crude rose $7.87, or 7.8%, to settle at $109.03 per barrel, while U.S. West Texas Intermediate (WTI) jumped $11.42, or 11.4%, to $111.54—marking its largest absolute daily gain since 2020. Despite the rally, both benchmarks remain below the highs near $120 per barrel reached earlier in the conflict.
The move higher reflects growing market anxiety that disruptions to Middle Eastern oil flows could persist longer than previously anticipated. With no clear pathway outlined for de-escalation or the reopening of the Strait of Hormuz, the geopolitical risk premium has been rebuilt into prices.
Iran has effectively halted traffic through the strait—responsible for roughly 20% of global oil and LNG flows—in response to ongoing military action. While discussions around monitoring and reopening the waterway are underway, the timeline for restoring flows remains highly uncertain.
Market focus has shifted toward the potential for deeper infrastructure damage and delays in bringing supply back online, even in a stabilization scenario. As a result, traders are increasingly pricing in an extended disruption period.
Notably, WTI traded at a premium to Brent during the session—an uncommon structure—reflecting tight near-term U.S. supply dynamics and strong prompt demand. This inversion highlights the severity of current market dislocations.
Forward price expectations remain elevated, with projections suggesting crude could trade in the $120–$130 range in the near term, and potentially move higher if disruptions persist into mid-May or beyond.
On the supply side, incremental increases remain limited. While OPEC+ is expected to consider raising output, any meaningful additions are unlikely until key transit routes are restored. At the same time, additional disruptions to Russian export infrastructure are adding to global supply constraints.
Overall, the market remains highly reactive to geopolitical developments, with price direction increasingly driven by expectations around the duration of supply outages and the timing of any resolution to the conflict.