Oil Prices Make Major Move Amid New Developments In Middle East

Oil prices surged Thursday to their highest level in weeks after the latest escalation in the Iran conflict rattled global energy markets and fueled fears of fresh supply disruptions.

Brent crude, the international benchmark, climbed more than 6% to top $100 a barrel in early trading. It marked the highest price since the end of May.

U.S. West Texas Intermediate crude also extended its rally for a second straight day, jumping more than 5% to nearly $92 a barrel. That was its highest level since June 11.

The sharp move higher came after Iran-backed Houthi rebels claimed responsibility for attacks on two Saudi oil tankers in the Red Sea, just days after announcing a naval blockade targeting the kingdom.

The reported strikes suggested the conflict is expanding beyond the Strait of Hormuz for the first time since the war began, raising concerns that another critical shipping lane could be under threat.

Markets are particularly sensitive to any disruption near the Bab el-Mandeb strait, a major global chokepoint through which millions of barrels of oil pass each day. The waterway also carries roughly 12% to 15% of global maritime trade, valued at more than $1 trillion annually.

The route has become increasingly important as traffic through the Strait of Hormuz has nearly ground to a halt, with ship crossings reportedly falling into the single digits earlier this week.

The latest spike means oil prices have climbed roughly 35% since the beginning of the month and are now up more than 60% since the start of the year.

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Drivers are already beginning to feel the impact at the pump.

The national average price for a gallon of regular gasoline rose to $4.09 on Thursday, up from $4.06 a day earlier, according to AAA.

The increase wipes out much of the relief motorists saw after the United States and Iran reached a memorandum of understanding in mid-June. That agreement has since unraveled as fighting intensified.

President Donald Trump warned Wednesday that the United States would retaliate aggressively against any further attacks on commercial shipping, threatening to destroy Iranian infrastructure if Tehran continued targeting vessels.

Hours later, the Houthis claimed they had struck two Saudi tankers in the Red Sea.

The United Kingdom Maritime Trade Operations agency reported that a tanker north of the Bab el-Mandeb strait had been “struck by an unknown projectile.” Separately, Saudi state media reported that the tanker Encelia caught fire during an overnight attack in the Red Sea, citing an unnamed source from the General Authority of Transport. The report did not mention the tanker Layla.

“Inflation has remained top of the agenda for markets this morning,” said Deutsche Bank global head of macro research Jim Reid, citing the surge in Brent crude. “Indeed, the strikes between the US and Iran show no sign of easing, and the Houthis said they targeted two oil tankers in the Red Sea yesterday, raising fears that the conflict is widening.”

Renewed concerns over inflation have also rippled through financial markets.

The yield on the benchmark 10-year U.S. Treasury note climbed to 4.67% early Thursday, its highest level since January 2025.

Treasury yields influence borrowing costs across the economy, including home loans. On Wednesday, the average rate on a 30-year fixed mortgage rose to 6.77%, the highest level since July 2025.

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