(Bloomberg) — U.S. oil futures surged to a 20-month high Thursday as investors increasingly priced in the risk of a prolonged Middle East conflict that could disrupt global energy flows.
West Texas Intermediate (WTI) jumped 8.5% to settle near $81/bbl, the highest level since July 2024, while Brent crude closed above $85/bbl. Prices eased slightly in post-settlement trading after the Trump administration said it was weighing measures to address the rally, including a possible release of crude from the U.S. Strategic Petroleum Reserve and Treasury purchases of oil futures.
Markets remain focused on the Strait of Hormuz, the key export route for Persian Gulf producers through which roughly 20% of global oil supply normally flows. Shipping activity through the waterway has collapsed, with most tanker owners unwilling to transit the route despite insurers indicating that coverage remains available. Ship-tracking data compiled by Bloomberg show traffic through the strait has plunged by more than 95%.
The conflict has already begun rippling across global fuel markets. China has told major refiners to suspend exports of diesel and gasoline to prioritize domestic supply, while Japanese refiners have asked their government to consider releasing crude from strategic reserves. Kuwait has also cut processing rates at its refineries as regional supply chains tighten.
See also: Asia oil crunch deepens as Middle East conflict disrupts fuel supplies
“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, senior market analyst at brokerage Phillip Nova Pte.
WTI has rallied faster than Brent in recent sessions as traders seek barrels less exposed to Gulf shipping bottlenecks. Rising freight costs, seasonal refinery maintenance and tightening domestic inventories have also helped support U.S. crude prices.
Energy markets broadly are feeling the impact of the conflict. Freight rates have climbed, fuel prices have surged and governments across importing nations are evaluating emergency supply measures as the risk of a prolonged disruption to Middle East exports grows.
Map of the Strait of Hormuz. (Map Source: Global Energy Infrastructure.)
