Oil Prices Surge to Highest Level Since Iran War Began, Exceeding $126 per Barrel

Oil prices reached their highest levels since the Iran war began, with Brent crude briefly topping $126 per barrel before pulling back on Thursday morning.

Why This Matters

The spike in oil prices is expected to drive U.S. gasoline prices higher, as the market reacts to the possibility of an extended stalemate that could throttle the Strait of Hormuz. Traders are also factoring in the risk of military escalation.

Key Developments

• Military Briefing: President Trump is scheduled to receive a briefing today on new plans for potential military action in Iran, according to Axios' Barak Ravid.
• Price Adjustments: Brent crude fell back to approximately $114 per barrel as of 8 a.m. Eastern, while West Texas Intermediate, the U.S. benchmark, stood at around $104 per barrel.
• Gasoline Prices: The average U.S. gasoline price hit $4.30 per gallon on Thursday morning, up more than 7 cents from Wednesday and over a dollar higher than the $3.18 average from a year ago, per AAA data.

Expert Analysis

"The oil market has moved from over-optimism to the reality of the supply disruption we are seeing in the Persian Gulf," said ING analysts Warren Patterson and Ewa Manthey in a note.

The breakdown of U.S.-Iran talks and President Trump's rejection of Iran's latest offer on Hormuz "has the market losing hope for any quick resumption in oil flows," they added.

Market Volatility Factors

Beyond the ongoing supply disruption, today's expiration of the June Brent futures contract is contributing to market volatility.

Ongoing Developments

The Wall Street Journal reported last night that U.S. officials are making fresh efforts to form an international coalition to ensure safe navigation in the region.

We are closely monitoring these developments as they unfold.