Oil surges past $125 as US–Iran tensions fuel fears of prolonged supply disruption

Oil prices climbed above $125 a barrel on Thursday, hitting their highest level since 2022, as markets reacted to rising fears of a prolonged US–Iran confrontation that could tighten global supply.

June Brent futures jumped 6.2 per cent to $125.36 a barrel in early trade, while the July contract rose 3.1 per cent to $113.85. US benchmark West Texas Intermediate climbed 2.3 per cent to $109.38 per barrel, reflecting broad-based strength across crude markets.

The latest rally comes as negotiations between the US and Iran remain deadlocked, raising doubts over any near-term reopening of the Strait of Hormuz. The waterway typically carries about a fifth of the world’s oil and liquefied natural gas, making any disruption a major risk for markets.

The latest surge comes as geopolitical tensions in West Asia intensify, with uncertainty over shipping through the Strait of Hormuz adding to market anxiety. The waterway is a key route for global oil flows, and any sustained disruption is seen as a major risk to supply.

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The Strait of Hormuz, which handles about a fifth of the world’s oil and liquefied natural gas shipments, has already seen reduced traffic amid heightened tensions. This has tightened supply conditions at a time when markets were already sensitive to geopolitical risks.

Analysts say Brent’s rise to its highest level since 2022 reflects growing expectations that disruptions may persist rather than ease in the near term. Goldman Sachs has estimated a sharp fall in flows through the strait, warning that limited spare capacity elsewhere may not be enough to offset losses if the blockade continues.

At the same time, some experts point to weaker fuel demand in sectors such as aviation and petrochemicals, which could temper price gains. However, for now, supply concerns continue to dominate sentiment.