BY COMFORT OGBONNA
Oil prices surged sharply on Thursday as traders reacted to escalating tensions in the Middle East and growing fears of prolonged disruptions to global energy supplies. The spike came after U.S. President Donald Trump said the United States would intensify its military operations against Iran, raising concerns that the conflict could drag on and further threaten critical oil routes.
Global benchmark Brent crude oil jumped nearly 8% in volatile trading, closing $7.87 higher at $109.03 per barrel. Meanwhile, West Texas Intermediate crude futures surged even more sharply, rising $11.42, or 11.41%, to settle at $111.54 per barrel. The gain marked the largest single-day price increase for U.S. crude since 2020, highlighting the intensity of market reactions to the rapidly developing geopolitical situation.
Despite the steep rally, both oil benchmarks remained below earlier peaks near $120 per barrel that were briefly touched during the early days of the conflict. Still, the latest surge reflects the growing anxiety among investors about how long the crisis could disrupt energy supplies.
Speaking about the ongoing military campaign, Trump indicated that U.S. attacks on Iran would intensify in the coming weeks, though he did not provide a clear timeline for when hostilities might end. His comments signaled that tensions could escalate further, adding to the uncertainty already gripping global energy markets.
At the same time, no specific plan was announced regarding the reopening of the Strait of Hormuz, one of the most critical shipping lanes for global energy. The narrow passage connects the Persian Gulf to the Arabian Sea and serves as a vital artery through which roughly one-fifth of the world’s oil and liquefied natural gas supplies are transported.
Iran has effectively shut down the strait following U.S. and Israeli strikes that began on February 28. The closure has sent shockwaves through global markets, as the blockade threatens to choke off one of the most important routes for energy shipments. Governments and companies worldwide are now scrambling to find ways to stabilize the situation before energy prices spiral even higher.
According to an Iranian foreign ministry official, Iran is working on a monitoring protocol with Oman to oversee maritime traffic through the waterway. The move follows reports that diplomatic channels are being explored to manage shipping activity while tensions remain high.
Energy analysts say the biggest concern for traders now is the possibility that Iran’s oil infrastructure itself could become a target as the conflict intensifies. If key facilities are damaged, even a reopening of the strait might not immediately restore normal oil flows.
Dennis Kissler, senior vice president of trading at BOK Financial, said the situation is raising major questions about how quickly energy supplies can return to normal. According to him, the longer the conflict continues and the more infrastructure is threatened, the greater the delay in restarting oil exports across the region.
One unusual development in the oil market is the pricing relationship between global crude benchmarks. Typically, U.S. crude trades at a discount to Brent. However, during Thursday’s trading, West Texas Intermediate was priced nearly $3 higher than Brent. The unusual premium reflects the structure of the contracts currently being traded, with WTI linked to May deliveries while Brent futures were tied to June shipments.
This pricing gap pushed WTI’s premium over the global benchmark to its highest level in about a year, illustrating how rapidly market conditions have shifted.
John Kilduff, a partner at Again Capital, said traders are closely watching whether the Strait of Hormuz might reopen within the next few weeks. If the passage is restored quickly, the risk premium currently embedded in oil prices could decline just as rapidly.
Economic policymakers are also assessing the potential global impact of the conflict. Lorie Logan said the economic effects of the war might remain moderate if the crisis is resolved quickly. However, she noted that the outlook remains highly uncertain as energy markets respond to shifting geopolitical risks.
Logan added that the United States has certain economic buffers that may help absorb some of the shock from higher energy prices, though prolonged disruptions could still create broader challenges for global growth.
Major financial institutions are already projecting significant volatility in oil prices throughout the year. Analysts at Citigroup estimate that Brent crude could average about $95 per barrel under a base-case scenario during the second half of the year. In a more bullish scenario, prices could climb to around $130 per barrel.
Meanwhile, analysts at JPMorgan Chase believe oil could reach between $120 and $130 per barrel in the near term. They also warned that prices could surge beyond $150 per barrel if the Strait of Hormuz remains closed into mid-May.
Rising prices are beginning to influence production decisions as well. According to new data from Baker Hughes, the number of active oil rigs in the United States increased by two this week, bringing the total to 411. The rig count is widely seen as a key indicator of future oil output.
Although higher prices typically encourage producers to increase drilling activity, many companies remain cautious. Energy producers have indicated they would prefer to see sustained higher prices before committing to significant expansions in drilling operations.
Market structure is also reflecting the tightness in supply. Front-month WTI contracts traded at their largest-ever premium compared with both second-month and seventh-month contracts on Thursday, a sign that traders are willing to pay significantly more for immediate oil deliveries than for shipments scheduled months later.
Efforts are underway internationally to address the shipping crisis in the Persian Gulf. The United Kingdom is hosting a virtual meeting involving around 40 countries to explore possible solutions for reopening the Strait of Hormuz and restoring safe maritime traffic through the region. The United States is not expected to participate in the meeting.
Meanwhile, members of the OPEC+ are expected to discuss a potential increase in oil output during a meeting scheduled for Sunday. The move could position the group to boost supply if the Strait of Hormuz reopens, though analysts say any production increase would take time to significantly affect global markets.
Elsewhere, disruptions to energy infrastructure are also emerging in Eastern Europe. Ukrainian attacks on Russian port facilities, pipelines, and refineries have reportedly reduced Russia’s export capacity by about 1 million barrels per day, roughly one-fifth of the country’s total capability. Such damage could eventually force production cuts if repairs take time.
The head of the International Energy Agency has also warned that supply disruptions may begin affecting Europe’s economy as early as April. The region had previously been shielded from the worst impacts because many shipments had been contracted before the conflict began.
With tensions continuing to escalate and key shipping routes still blocked, the global oil market remains on edge. Traders, governments, and energy companies are all watching developments closely, knowing that even small changes in the conflict could send oil prices sharply higher or lower in the weeks ahead.