Oil prices hit 4-year high as Iran war tightens supply

Oil markets react as conflict risks rise

Oil prices surged as the US-Israel-Iran conflict added fresh uncertainty to energy flows from the Gulf. Brent crude briefly topped $126 a barrel on Thursday, a four-year high, as stalled US-Iran talks raised doubts about reopening the Strait of Hormuz and securing a durable end to the war. Traders also reacted to signals that the US could expand military operations. The moves fed through quickly into retail fuel prices in the US and policy warnings in import-dependent countries.

Washington faces questions on war duration and costs

US Defense Secretary Pete Hegseth faced lawmakers for a second day after declining to answer questions on how much longer the Iran war could last or how much it might ultimately cost. A Pentagon official said the conflict has already cost US taxpayers around $15 billion. The war’s budget impact has become part of the political debate in Washington, especially as energy prices rise. The lack of a clear timeline has kept markets focused on disruption risk.

Trump briefed on potential new wave of strikes

A Thursday report by Axios, citing two anonymous sources with knowledge of the planning, said President Donald Trump was expected to receive a briefing on options for a potential resumption of military action in Iran. The briefing was expected from Admiral Brad Cooper, the commander of US Central Command, the report said. Axios reported that options could include a wave of “short and powerful” strikes, including against infrastructure. Separately, Trump has said the US blockade of Iran’s ports and ships will eventually force the regime to accept his terms for a peace deal, while Iran’s president called the blockade “doomed to fail.”

Strait of Hormuz remains the central market concern

The market focus has remained on shipping access through the Strait of Hormuz, a critical route for global oil and gas flows. In one set of live updates, Trump’s deadline for Iran to reopen the strait was reported to expire, with warnings of potential strikes on power plants if access was not restored. Iran, according to the same live update stream, warned it would fully shut the strait and target regional energy infrastructure if attacked. These statements, alongside reports of attacks in the region, contributed to sharp price swings.

Oil prices surge, then whipsaw on changing signals

Oil futures moved sharply as traders weighed whether the war would wrap up quickly or widen. On Thursday, US benchmark West Texas Intermediate (WTI) jumped 11.9% to just over $112 per barrel for May deliveries, while Brent rose almost 8% to more than $109 per barrel for June deliveries. Earlier reporting also noted Brent around $107 a barrel on Tuesday, up more than 45% since the war began on February 28. Prices also fluctuated around mid-week, with Brent for June reported at $105.37 at one point and WTI at $102.97, before later declines took Brent below $100 and WTI near $17 to $18 in subsequent updates.

Fuel inflation becomes visible in the US

US retail fuel prices followed crude higher. According to AAA, average US gas prices rose above $1 per gallon for the first time since 2022, and also hit their highest level in four years on Tuesday. The higher pump prices have become a key pressure point for households and businesses, and were cited as affecting motorists, delivery drivers and farmers. Analysts cited in the report warned groceries could be next, reflecting expected pass-through from transport and packaging costs.

Ripple effects across countries: Pakistan raises pump prices

Governments in other regions reacted to the energy shock. Pakistan’s government announced a sharp increase in fuel prices in response to spiking global energy prices linked to the Iran war. The petroleum minister said gas prices rose 42.7% and diesel prices rose 54.9%. Pakistan also announced a new petrol price of Rs 458.40 per litre (about $1.64 per litre), effective from the next day, according to the minister’s statement.

India angle: RBI flags crude dependence and buffers

For India, the episode feeds directly into inflation and external balance risks due to high crude import dependence. The Reserve Bank of India (RBI) said the evolving situation requires close monitoring and proactive measures to limit adverse spillovers. The RBI also suggested that creating an Economic Stabilisation Fund would provide fiscal headroom and a buffer to respond effectively to global headwinds. These signals matter for Indian equities because energy-driven input costs and inflation expectations can influence corporate margins and interest-rate conditions.

Shipping and energy logistics: Indian charter links mentioned

Live updates also referenced vessel chartering links involving Indian firms. The vessel carrying LNG was reported as chartered by Petronet LNG. Crude oil vessels were reported as chartered by Indian Oil Corporation (IOCL), Reliance, and PGN International. While the updates did not specify routes, volumes, or incident details for these vessels, the mention underlines how Gulf shipping risks can intersect with Indian energy procurement and logistics.

Key figures and developments at a glance

Why markets are staying cautious

The reported combination of possible expanded strikes, contested shipping access near Hormuz, and retaliation threats has kept volatility elevated. Stock moves cited in the report showed mixed US equity performance on a high-volatility day: the Dow closed down 0.13%, the S&P 500 ticked up 0.11%, and the NASDAQ rose 0.18%. For India, the clearest transmission channel in the provided updates is energy-price pass-through, reflected in RBI’s explicit warning on crude dependence and spillover risks.

Conclusion

The latest set of updates points to a conflict still shaping energy prices through both physical supply risks and changing military and diplomatic signals. Markets are watching for the next official decisions, including Trump’s expected briefing on potential new strike plans and any movement around the Strait of Hormuz, alongside policy responses flagged by central banks such as the RBI.