Oil Prices Hit Four-Year High Amid Strait of Hormuz Tensions
Oil prices surged to their highest level since 2022 on Thursday after reports that the US military is set to brief President Donald Trump on new plans for potential military action against Iran.
Brent crude rose by almost 7% to more than $126 (£94) a barrel at one point, before falling back. According to Axios, US Central Command has prepared a plan for a wave of “short and powerful” strikes on Iran to try to break the deadlock in negotiations with Tehran. The BBC has contacted US Central Command and the White House for comment.
Energy prices have been rising this week as peace talks appear to have stalled, with the key Strait of Hormuz waterway still effectively closed. About 20% of the world’s oil and liquefied natural gas (LNG) usually passes through the strait, and the conflict has sent global energy prices soaring.
Brent crude touched $126.31 a barrel earlier on Thursday, the highest since Russia’s full-scale invasion of Ukraine. However, the price then fell back sharply later in the day to around $114.
The sharp swing in oil prices was partly attributed to futures contract deadlines. Naveen Das, senior oil analyst at Kpler, said the Brent futures contract for June delivery expired on Thursday, contributing to the drop. The more active July contract was trading lower at around $110 a barrel.
Crude oil is a key ingredient in petrol and diesel, and the jump in costs since the start of the Iran war has pushed up pump prices for motorists.
In the UK, petrol currently costs an average of 157p a litre, according to motoring group RAC — 24p higher than before the war began. Diesel stands at 188.5p a litre, up 46p compared with its pre-war price.
RAC head of policy Simon Williams said that while petrol prices at the pump have fallen, “our analysis of wholesale costs shows petrol is now more expensive for retailers to buy than at any time since the war began.” However, diesel, which has come down by 3p a litre, “is currently well below its highest wholesale price since the start of the conflict, so should fall further.”
But the potential impact extends far beyond fuel prices. The UK government has warned that people could face higher energy, food, and flight ticket prices as a result of the war. Some airlines have already started raising fares or reducing flights. Fertiliser prices have also begun increasing, which could have a knock-on effect on food prices.
The Axios report cited anonymous sources saying the proposed wave of strikes would likely include infrastructure targets. Another plan focused on taking over part of the Strait of Hormuz so it can be reopened for commercial shipping — a move that could involve troops on the ground.
Meanwhile, a statement attributed to Iran’s Supreme Leader Mojtaba Khamanei said that Tehran would secure the Strait of Hormuz and eliminate “the enemy’s abuses of the waterway.” Khamanei’s statement also said a “new chapter” for the region had been taking shape since the start of the US-Israeli war with Iran on 28 February.
The US said it would blockade Iranian ports for as long as Tehran continues to threaten vessels trying to use the Strait of Hormuz, severely disrupting global energy shipments. Iran has retaliated against US-Israeli airstrikes by threatening to attack ships in the waterway.