Seven ships crossed instead of the usual 125 to 140.
In the shadow of a conflict that has already claimed thousands of lives and severed one of civilization's most vital arteries, global oil markets swung between fear and exhaustion on Thursday — briefly touching a four-year high of $126 a barrel before retreating, as if the market itself could not decide whether to panic or endure. The near-closure of the Strait of Hormuz, through which a fifth of the world's oil and gas once flowed freely, has doubled energy prices since February and now threatens to rekindle the inflation that so many economies had only just begun to escape. With negotiations deadlocked and no resolution in sight, the world finds itself weighing not whether this disruption will deepen, but how much weight the global economy can bear before something fundamental gives way.
- Brent crude surged to $126.41 a barrel — its highest since March 2022 — after reports that President Trump would be briefed on potential military strikes against Iran, sending traders into a brief but violent panic.
- The Strait of Hormuz, once crossed by up to 140 ships a day, saw only seven vessels pass in the previous 24 hours, marking what the IEA calls the largest oil supply disruption in recorded history.
- Prices whipsawed back to $113.90 by midday with no clear trigger, a $12 collapse that analysts say reflects not relief but the grinding, directionless anxiety that has defined oil trading since the conflict began.
- Negotiations remain deadlocked — the U.S. demanding talks on Iran's nuclear program while Iran insists on strait control and war reparations — leaving markets with no credible path to resolution.
- Demand destruction of roughly 1.6 million barrels per day is emerging as prices bite into consumption, but analysts warn it is nowhere near enough to fill the void left by the strait's effective closure.
- With Brent on track for a fourth straight monthly gain and one analyst warning of $150 a barrel if the conflict persists, markets are no longer asking if prices will fall — they are asking what breaks first.
Oil prices lurched through another volatile session on Thursday, briefly reaching $126.41 a barrel — the highest since March 2022 — before falling back to $113.90 by midday. The morning spike came on reports that President Trump would receive a briefing on potential military strikes against Iran. The afternoon retreat, triggered by two large sell orders just before 9:30 a.m., had no obvious explanation. That whipsaw has become the market's new normal.
The underlying reality is stark. Brent crude has doubled since the U.S.-Iran conflict began on February 28. The Strait of Hormuz — through which 125 to 140 ships once passed daily — saw only seven vessels in the previous 24 hours. The International Energy Agency has called it the largest oil supply disruption on record. Thousands have died. And the strait's near-closure is cutting off roughly 20 percent of the world's oil and liquefied natural gas supply.
Diplomacy has stalled entirely. Washington insists on addressing Iran's nuclear weapons program; Tehran demands control over the strait and compensation for war damage. Trump called for a ceasefire earlier this month while simultaneously imposing a blockade on Iranian ports — a contradiction that signals how little common ground exists. Analysts see no near-term path to resolution.
The economic fallout is spreading. High energy prices threaten renewed global inflation, with one analyst warning Brent could reach $150 a barrel if the conflict drags on. Some relief may come from modest OPEC+ output increases and the UAE's surprise decision to leave the cartel — a move that could eventually free it to pump more. Demand destruction, estimated at 1.6 million barrels per day, is also beginning to ease pressure at the margins. But none of it is enough to replace what the closed strait has taken away.
With both major benchmarks heading for a fourth consecutive month of gains, markets have effectively priced in a prolonged crisis. The question hanging over every trading floor is no longer whether prices will ease — it is whether the conflict or the global economy will crack first.
Oil prices swung wildly on Thursday, climbing to their highest level in four years before pulling back just as sharply, a pattern that has become the market's new rhythm since the U.S.-Iran conflict began shutting down one of the world's most critical shipping lanes.
Brent crude, the global benchmark, reached $126.41 a barrel in morning trading—a level not seen since March 2022—driven by reports that President Trump would receive a briefing on potential military strikes against Iran. The spike reflected genuine fear: if the conflict escalates further, the Strait of Hormuz could remain effectively closed for months, choking off roughly a fifth of the world's oil and liquefied natural gas supply. By midday, however, the price had retreated to $113.90, a drop of more than $12 a barrel with no clear trigger. Traders pointed to two large sell orders that hit the market just before 9:30 a.m., but analysts suggested the volatility itself—the whipsaw between hope and dread—had become the defining feature of oil trading since February 28, when the conflict began in earnest.
The numbers tell the story of a market under siege. Brent has doubled since the fighting started. West Texas Intermediate crude, the U.S. benchmark, is up roughly 90 percent. The Strait of Hormuz, normally bustling with 125 to 140 vessels daily, saw only seven ships pass through in the previous 24 hours—three bulk carriers, one container ship, and two tankers carrying bitumen. This is not a minor inconvenience. It is the world's biggest oil disruption on record, according to the International Energy Agency, and it has killed thousands of people.
Negotiations to end the conflict have stalled. The U.S. insists on discussing Iran's nuclear weapons program. Iran demands some control over the strait itself and compensation for war damage. Trump called for a ceasefire earlier this month but simultaneously imposed a blockade on Iranian ports, a move that underscores how little common ground exists between the parties. Analysts see no near-term path to resolution or to reopening the waterway.
The economic consequences ripple outward. High oil prices threaten a resurgence of global inflation and could drive up pump prices in the U.S. just as midterm elections approach. Oil and its byproducts fuel transportation, power homes and factories, and feed the production of plastics and fertilizers—the sinews of modern life. One analyst at PVM oil brokerage warned that Brent could reach $150 a barrel if the conflict persists. Another noted that the market's heightened volatility reflects not a single catalyst but rather the grinding uncertainty of a conflict with no visible end.
There are some countervailing forces. The United Arab Emirates announced this week it would leave OPEC after nearly 60 years of membership, a move that could eventually allow it to boost production once exports resume. OPEC+ is expected to approve a modest increase of around 188,000 barrels per day in output quotas on Sunday. More significantly, the sheer cost of oil is beginning to destroy demand—consumers and businesses are simply using less because they cannot afford more. Analysts estimate this demand destruction at roughly 1.6 million barrels per day, a substantial figure. Yet even that is not enough to close the supply gap created by the Strait's closure.
Oil markets are pricing in a prolonged crisis. Both Brent and West Texas Intermediate are on track for their fourth consecutive month of gains, a streak that reflects the market's conviction that the Iran conflict will choke global supplies for months to come. The question now is not whether prices will fall, but how much higher they might climb before something breaks—either the conflict itself or the global economy trying to function beneath the weight of $110-plus oil.
Notable Quotes
For those who do not think Brent prices have the potential to reach $150 a barrel, you ought to look away now.— John Evans, PVM oil broker
Prospects for any near-term resolution to the Iran conflict or a reopening of the Strait of Hormuz remain dim.— Tony Sycamore, IG market analyst
The Hearth Conversation Another angle on the story
Why did the price drop so sharply if the military strike briefing was supposed to be happening?
That's the thing—there wasn't a clear reason. Two large sell orders hit the market around 9:30 in the morning, but analysts think the real story is just the volatility itself. The market is so tense, so reactive to every rumor and report, that prices can swing $12 a barrel on almost nothing.
So the underlying fear about the Strait of Hormuz hasn't changed?
Not at all. Seven ships crossed it yesterday instead of the usual 125 to 140. That's the constraint that matters. As long as that waterway stays closed, the supply problem is real, and prices stay elevated.
What would actually bring prices down?
A resolution to the conflict, obviously. But negotiations are deadlocked—the U.S. wants to talk about Iran's nuclear program, Iran wants control of the strait and reparations. Neither side seems willing to move. The other possibility is demand destruction. People and businesses stop buying oil because it's too expensive. We're already seeing about 1.6 million barrels a day of that, but it's not enough to fill the gap.
Is there any relief coming from OPEC?
A small increase, maybe 188,000 barrels a day on Sunday. But the UAE just left OPEC after 60 years, which complicates things. The real issue is that no amount of supply adjustment can offset a closed strait. You're talking about 20 percent of global oil and gas transit being cut off.
How long can the global economy function at these prices?
That's what everyone's asking. One analyst said $150 a barrel is possible. At that point, you're looking at serious inflation, higher gas prices heading into elections, disruption to manufacturing and shipping. The market is betting this conflict lasts months, not weeks.