Brent oil rallied to a four-year high after Axios reported that US President Donald Trump will receive a briefing on new military options for action in Iran, signaling the potential for fresh escalation in the Middle East.
Oil Prices Surge on Military Briefing News
The global benchmark surged as much as 7.1% to surpass $126 a barrel — the highest since the aftermath of Russia’s invasion of Ukraine in 2022 — before paring gains to trade near $122. The head of US Central Command Admiral Brad Cooper will brief Trump on Thursday, signaling that a resumption of combat operations is seriously under consideration, Axios said, citing two unnamed people.
A ceasefire has held since early April, but recent efforts to get negotiators from the two sides to meet have so far failed, with the US and Iran both maintaining their blockade of the vital Strait of Hormuz. Central Command has asked for hypersonic missiles to be sent to the Middle East, which would mark the first time the American army has deployed those weapons.
Impact on Global Energy Markets
The Strait of Hormuz has been effectively closed since the war started at the end of February, choking off flows of crude, natural gas and oil products, and driving up energy prices. On Tuesday, Trump discussed steps the US could take to prolong its blockade while minimizing the impact on American consumers at a meeting with oil and trading executives, the White House said.
“Trump has ripped away the security blanket the market was clinging to — the hope that the war was about to end,” said Robert Rennie, head of commodity research at Westpac Banking Corp. “Traders are now being forced to confront a much uglier reality: both sides still think they are winning, neither side has a clear incentive to negotiate, and energy prices are starting to accelerate higher.”
Potential Military Actions
US Central Command has prepared a plan for a “short and powerful” wave of strikes on Iran, likely including infrastructure targets, according to the Axios report. Admiral Cooper gave the American president a similar briefing on Feb. 26, shortly before the US and Israel started the war, Axios said.
Trading volumes are thin for Brent’s June contract, which is set to expire at the end of the session. The more-active July futures advanced as high as $114.70 a barrel to the highest intraday level since June 2022.
Supply Shock and Blockade
Blockades of the Strait of Hormuz by the US and Iran have reduced daily transits to near zero. The International Energy Agency called the conflict in the Middle East the biggest supply shock in history, and Vitol Group says the market is facing a supply loss of around 1 billion barrels.
Trump told Axios separately that he would not lift a naval blockade on Iran’s ports until he secures a nuclear deal with Tehran, with Iranian officials defiant over a prolonged standoff. The US has turned away dozens of ships since deploying warships to stop Iranian vessels on April 13.
