The price of global oil rose on Thursday, as the energy market continues to react to the United States and Israel’s war with Iran.
The cost of a barrel of Brent crude oil, the global benchmark for oil prices, peaked at $118 per barrel on Thursday morning and then slightly receded, now hovering around $114. The spike is up from roughly $107 at the previous close, marking some of the highest prices since 2022. The cost of the commodity has increased by more than 48% since the war began in late February.
The development comes hours after Iran carried out strikes on the world’s largest liquefied natural gas complex in Qatar as a retaliatory measure against Arab Gulf States partnering with the U.S. and Israel. It came as a response to Israel’s strikes on South Pars, a key piece of Iran’s energy infrastructure. President Donald Trump responded to Iran’s Qatar strikes by threatening to bomb South Pars if Tehran dared to strike Qatar’s energy markets again.
The attacks on the production facilities mark a significant escalation in the war. If energy production infrastructure is significantly damaged, it will take far longer for markets to rebound.
Rystad Energy said Iran’s threatened strikes on other key energy facilities in Saudi Arabia, the United Arab Emirates, and Qatar could push oil prices past $120 a barrel immediately, according to the Wall Street Journal. The five facilities warned by Iran together account for roughly 20% of global LNG trade.
Meanwhile, significant blockage in the Strait of Hormuz continues to destabilize the oil industry, creating the largest disruption to energy supply in history.
The strait is a narrow yet strategically important waterway near the Persian Gulf. Around 20% of the world’s oil passes through the strait, but activity has been severely curtailed due to Iran’s sweeping influence over the waterway and its move to shut it down as a retaliatory measure after the strikes began on Feb. 28.
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The Federal Reserve held interest rates steady on Wednesday, warning that “the implications of developments in the Middle East for the U.S. economy are uncertain.”
“Near-term measures of inflation expectations have risen in recent weeks, likely reflecting the substantial rise in oil prices caused by the supply disruptions in the Middle East,” Fed Chairman Jerome Powell said.
As of Thursday morning, gas in the U.S. reached $3.88 per gallon, a 30 cent bump from last week.
