Iran Conflict Update: Oil Prices Surge as Military Pressure Mounts

Global energy markets lurched higher Thursday as the standoff over the Strait of Hormuz deepened, with oil prices briefly touching a four-year peak amid reports that U.S. military officials were set to brief President Donald Trump on new strike options against Iran, and as Iranian Supreme Leader Mojtaba Khamenei vowed that Tehran would never relinquish control of the critical waterway.

Brent crude surged nearly 7 percent Thursday morning, briefly reaching $126.31 a barrel – the highest price since Russia’s full-scale invasion of Ukraine in 2022 – before falling back sharply to around $114 by afternoon. Analysts attributed part of the volatility to the expiration of the June Brent futures contract Thursday, with the more actively traded July contract settling around $110 a barrel.

The dramatic price movement came against the backdrop of an Axios report that U.S. Central Command has drafted plans for a wave of “short and powerful” strikes on Iran designed to break the negotiating deadlock with Tehran. 

In the United States, average gasoline prices hit $4.30 per gallon Thursday – the largest single-day jump in six weeks – as the Strait of Hormuz, through which roughly 20 percent of the world’s oil and liquefied natural gas normally flows, remains effectively closed.

With peace talks apparently stalled, the White House appears to be keeping the military option firmly on the table. Trump was scheduled to receive an updated briefing from Pentagon officials Thursday on potential military action against Iran, according to reporting by Axios, whose account cited anonymous sources.

The current U.S. strategy has centered on inflicting maximum economic pressure on Iran, including a blockade of Iranian ports that Washington says will remain in place as long as Tehran threatens commercial vessels in the Strait of Hormuz. Oil prices had already risen 6 percent on Wednesday following reports that Washington was preparing for an “extended” blockade.

“It does seem as though escalation in the war is back on the table,” Naveen Das, senior oil analyst at Kpler, told the BBC. He added that an oil price approaching $125 per barrel is the threshold at which businesses and policymakers “start to get a bit more jittery.”

Energy executives met with Trump on Tuesday to discuss ways to limit the war’s impact on American consumers – a meeting that, according to the BBC, further fueled market anxiety about prolonged supply disruptions.

Susannah Streeter, chief investment strategist at Wealth Club, warned that the cost pressures may be slow to dissipate. “Urea shipments, used for fertiliser, are blocked and costs have rocketed for farmers around the world who didn’t buy stocks in advance,” she said, adding that those costs were likely to work through supply chains and push up everyday goods prices “later in the year and into next year.”

Iranian Supreme Leader Mojtaba Khamenei issued a sweeping statement Thursday declaring that Iran would “ensure the security of the Gulf region and eliminate the possibility of exploitation by enemies” through its management of the Strait of Hormuz. Framing the conflict in expansive historical terms, Khamenei declared that a “new chapter” for the region had been unfolding since the start of what he called “the campaign of aggression by global bullies” on February 28.

“The new laws and management of the Strait will bring stability and prosperity to all the peoples of the region,” Khamenei wrote in his message to the Iranian people.

Mohsen Rezaee, an adviser to Khamenei, amplified the defiance on social media. “The siege scenario will fail and Iran will never lose the Strait of Hormuz,” Rezaee wrote, adding: “History will record that the Iranian nation drowned the superpower of the USA in the Persian Gulf and the Sea of Oman.”

Iran had previously retaliated against U.S.-Israeli airstrikes by threatening ships attempting to transit the Strait of Hormuz, triggering the U.S. blockade of Iranian ports.

Israeli Defense Minister Yisrael Katz, speaking Thursday at a ceremony promoting incoming Israeli Air Force chief Omer Tischler to the rank of major general – Tischler is set to replace Maj. Gen. Tomer Bar on May 5 – issued a pointed signal that Israel may not remain on the diplomatic sidelines indefinitely.

“Iran has suffered extremely severe blows over the past year, blows that have set it back years in all areas,” Katz said. “U.S. President Trump, in coordination with Prime Minister Benjamin Netanyahu, is leading the effort to complete the campaign’s objectives in a way that ensures Iran will not return to being a threat to the existence of Israel, to the United States, and to the free world for generations to come.”

“We support this effort and provide the necessary backing,” Katz added, “but we may soon be required to act again to ensure the objectives are achieved.”

In a development reported Wednesday, U.S. Central Command has separately asked the Pentagon to deploy the “Dark Eagle” long-range hypersonic missile system to the Middle East. The request followed reports that Iran has been moving its ballistic missile launchers deeper into its territory – beyond the approximately 500-kilometer range of the American PrSM missiles currently deployed in the theater.

The Dark Eagle, with an attributed range of roughly 2,775 kilometers, is designed to strike time-sensitive targets even when protected by advanced air defense systems. If approved, it would mark the first operational deployment of the system, which has not yet been declared fully combat-ready. The weapon is among the most closely held in the U.S. arsenal; the cost of a single missile is estimated at approximately $2.7 billion, and the United States is reported to possess fewer than ten of them.

The deployment, if authorized, would signal to Tehran that even targets deep within Iranian territory are no longer beyond American reach.