Brent touches $126 amid US military plan for ‘short and powerful’ strikes on Iran
The International Energy Agency described the situation as the largest supply disruption ever recorded.
Brent crude touched $126.41 a barrel on Thursday, its highest level since Russia’s invasion of Ukraine in 2022, after Axios reported that the US Central Command (CENTCOM) was preparing a military plan contemplating a wave of short and powerful strikes on Iranian infrastructure to force Tehran back to the negotiating table. The price subsequently moderated to close near $114, a decline partly attributed to the expiration of the June futures contract, but the European benchmark has gained more than 60% since the start of the war against Iran on February 28.
President Donald Trump is set to receive a briefing on Thursday from Admiral Brad Cooper, commander of CENTCOM, on the military alternatives available to break the deadlock in the Strait of Hormuz, where maritime traffic has collapsed to just 4% of normal levels, according to Goldman Sachs estimates. The session will also include an assessment of the US naval blockade on Iranian ports and two alternative plans: one focused on a series of short-duration but high-impact strikes against strategic infrastructure, and another centered on the partial seizure of the strait to reopen it to commerce, which would require deploying ground troops.
The prospect of further escalation amplified pressure on the markets. The International Energy Agency described the situation as the largest supply disruption ever recorded. The average gasoline price in the United States reached $4.30 per gallon, also the highest in four years, according to AAA. In the United Kingdom, fuel prices have risen 24 pence per litre since the start of the conflict, according to motoring group RAC. Wealth Club investment strategist Susannah Streeter warned that costs could be passed through supply chains and push up the price of everyday goods into next year.
Trump this week rejected an Iranian proposal to reopen the Strait of Hormuz without conditioning it on a broader nuclear agreement, and posted a message on his Truth Social platform stating that Tehran can’t have a nuclear weapon and that they better get smart soon. The new Iranian Supreme Leader, Mojtaba Khamenei — son of the late Ali Khamenei — declared on Thursday that the Islamic Republic will protect its nuclear and missile capabilities as national assets and will secure free navigation of the strait against the enemy’s abuses. Revolutionary Guard commander Seyed Majid Mousavi warned that any renewed US offensive will receive a swift and painful response.
The conflict, which will reach the two-month mark on Friday, has significantly altered the global energy landscape. Iranian exports are blocked, and derivative products, particularly diesel and urea used in fertilizers, have registered sharp price increases that threaten to push up food prices in the second half of the year. Goldman Sachs and other investment houses warn that oil could climb to $140 or $150 per barrel if the disruption is prolonged.
