Oil Price Surges to Highest Since 2022 on Reports of New US Military Options Against Iran
International crude oil prices experienced extreme volatility on Thursday, with Brent crude briefly jumping nearly 7% to over $126 a barrel — the highest level since Russia’s full-scale invasion of Ukraine in 2022 — before falling back to around $114. The sharp move followed reports that the US may resume military strikes on Iran.
US Central Command Prepares New Strike Plans
According to Axios, US Central Command has prepared a plan for a wave of “short and powerful” strikes on Iran, aimed at breaking the deadlock in negotiations with Tehran. The BBC has contacted US Central Command for comment.
Citing anonymous sources, Axios reported that the proposed wave of strikes would likely include infrastructure targets. A separate plan focused on taking control of part of the Strait of Hormuz to reopen it for commercial shipping, which Axios noted could involve ground troops.
Strait of Hormuz Closure Driving Prices Higher
Energy prices have been climbing throughout the week as peace talks appear to have stalled, with the critical Strait of Hormuz remaining effectively closed. Approximately 20% of the world’s oil and liquefied natural gas (LNG) typically passes through the strait, and the ongoing conflict has sent global energy prices soaring.
Crude oil is a key ingredient in petrol and diesel, and the surge in costs since the start of the Iran war has significantly raised pump prices for motorists. In the UK, petrol currently averages 157 pence per litre according to motoring group RAC, which is 24p higher than before the war began. Diesel is at 188.5 pence per litre, up 46p from pre-conflict levels.
Impact Extends Beyond Fuel Prices
The UK government has warned that people could face higher energy, food, and airfare prices as a result of the war. Some airlines have already begun raising fares or cutting flights. Fertilizer prices are also starting to increase, which could have knock-on effects on food prices.
RAC head of policy Simon Williams said that while pump prices for petrol have dipped, “our analysis of wholesale costs shows petrol is now more expensive for retailers to buy than at any time since the start of the conflict.”
Contract Expiry Amplifies Volatility
The June delivery Brent crude futures contract is due to expire on Thursday, adding to the day’s price swings. The more active July contract was trading at around $109 a barrel. Futures contracts are agreements to buy or sell an asset at a specified price on a future date, and price volatility tends to intensify near contract expiry dates.
Source: BBC News