Oil Settles Near 20-Month High

US oil futures shot up to the highest in 20 months as investors increasingly price in a prolonged war in the Middle East.

West Texas Intermediate surged 8.5% to settle near $81 a barrel, the highest since July 2024, while Brent ended the day above $85.

Prices eased in post-settlement trading after the Trump administration said it is weighing a range of options for addressing the price spikes stemming from the war on Iran. Possible actions include releasing crude from the country’s emergency oil reserve as well as US Treasury purchases of oil futures.

Earlier in the day, Beijing told major refiners to suspend exports of diesel and gasoline, reflecting efforts to prioritize domestic needs that threaten to ensnare consumers abroad. Japanese refiners asked their government to release oil from strategic petroleum reserves. Elsewhere, Kuwait has cut processing rates at its three oil refineries.

Arab states across the Middle East – as well as Israel – reported interceptions of Iranian missiles and drones into Thursday, with Qatar telling residents to remain indoors. Tehran said it struck an oil tanker in the Persian Gulf, underlining the risk to shipping in the energy-rich region.

“If we see even one more successful strike on an oil tanker or infrastructure, or sustained disruption, prices can spike sharply again,” said Priyanka Sachdeva, a senior market analyst at brokerage Phillip Nova Pte.

The market’s principal concern remains the Strait of Hormuz, through which about 20% of the world’s oil flows. Amir Heydari, an Iranian military commander, told state television that “we do not believe in closing” the route at all. Still, the conduit remains effectively blocked with almost no owners willing to transit – even as London insurers said cover was available – bottling up crude supplies and forcing some to start shutting in output.

In a bid to break the impasse at Hormuz – which connects the Persian Gulf to the Indian Ocean – Washington has proposed a plan to provide insurance guarantees to vessels and possibly naval escorts, though traders have met those plans with skepticism.

US oil rallied faster than Brent as fears of prolonged disruption in the Strait lifted demand for WTI barrels seen as less exposed to Gulf bottlenecks. Factors like higher freight rates and seasonal refinery maintenance tightening domestic supply are also supporting prices for US crude.

That dynamic is also reflected in the prompt spreads – the difference between the two closest contracts – for both benchmarks. The prompt spread for Brent has widened by nearly $4 a barrel in just over a week, while the equivalent WTI measure has increased by only about $2, underscoring the more acute near-term tightness in the North Sea market.

The conflict has hoisted oil, gas, and product prices, lifted freight rates, and spawned an ever-widening wave of disruption for producers, as well as importing nations that rely on flows from the region. It has also sparked fears of fresh inflation.

Ship-tracking data compiled by Bloomberg show traffic through the strait has plummeted by well over 95%, with major crude carriers and gas tankers avoiding the route. The few ships still moving are leaving the gulf with location transponders turned off, a common practice in conflict zones.

Oil Prices

WTI for April delivery rose 8.5% to settle at $81.01 a barrel in New York.
Brent for May settlement gained 4.9% to settle at $85.41 a barrel.

About 15 million barrels of oil a day transited the Strait of Hormuz in 2025, together with an extra 5 million barrels of products, according to the International Energy Agency, the Paris-based body that advises major economies.

“The sheer volume of oil that is exported via the Strait of Hormuz, and the limited options to bypass it, means that any disruption to flows would have huge consequences,” the IEA said in a study on its website.

Fuel markets are already seeing the impact from the conflict. In the UK, a major heating oil seller said it was managing deliveries to ensure supply is fairly distributed after a surge in demand. Europe’s diesel benchmark is up more than 40% since the conflict began.