Oil prices surged past $123 per barrel on Thursday morning, reaching their highest level since 2022, as President Donald Trump considers extending the US naval blockade of Iranian ports following the collapse of face to face negotiations between Washington and Tehran. Brent crude, the global benchmark, jumped more than 12% to hit $126 at one point, while West Texas Intermediate, the US standard, climbed over 3 percent to exceed $110 per barrel. The spike has already translated into pain at the pump, with the national average US gasoline price reaching a four year high of approximately $4.23 per gallon according to AAA data, as the ongoing war has driven energy costs up more than 27% since hostilities began in late February.
The root of the surge lies in the effective closure of the Strait of Hormuz, the narrow waterway through which roughly one fifth of global oil shipments normally pass. Daily transits through the strait have dropped to near zero since the war started, prompting the International Energy Agency to label the situation the largest supply disruption in history. With direct talks between US and Iranian officials breaking down, Trump reportedly told his top advisers during a recent meeting that he wants the naval blockade to continue indefinitely, and his team has already begun preparing for a long term closure of the strait. The June Brent futures contract is set to expire at the end of Thursday’s trading session, pushing volume into the July contract, which itself pushed above $113 per barrel Wednesday night, signaling that markets expect the supply crunch to persist well into the summer months.
For American consumers and businesses, the timing could not be worse. Higher fuel costs ripple through nearly every sector of the economy, from transportation and agriculture to manufacturing and air travel, raising the risk of broader inflation just as the Federal Reserve had begun gaining ground against price pressures. Energy analysts warn that sustained prices above $120 per barrel could tip vulnerable economies toward recession, particularly in Europe and developing nations that rely heavily on imported fuel. With no diplomatic breakthrough on the horizon and the blockade likely to remain in place, the world appears headed for a prolonged period of expensive energy that will test both household budgets and political patience across the globe.
