Global crude prices pushed higher on Thursday as Washington’s hardening stance on Iran intensified fears that disrupted Middle East supplies could remain locked out of the market for longer, extending a rally that has placed energy traders, refiners and importing economies on alert.Brent crude for June delivery rose towards $120 a barrel in Asian trade, while the more active July contract traded above $111. West Texas Intermediate moved above $107 after a sharp rise in the previous session, when the US benchmark jumped about 7 per cent. The advance marked another session of gains for oil, reflecting market anxiety over the deadlock in efforts to end the conflict involving the United States, Israel and Iran.
Traders are pricing in the risk that crude and fuel flows through the Gulf will stay constrained as diplomatic efforts remain stalled. The Strait of Hormuz, one of the world’s most important energy chokepoints, has remained at the centre of the disruption, with shipping limits and security threats curbing the movement of oil, liquefied natural gas and refined products from the region. Any prolonged restriction through the waterway would affect supplies from major Gulf producers and deepen competition among buyers in Asia and Europe.
US President Donald Trump’s approach has sharpened market concern. His administration has signalled a willingness to maintain pressure on Iran through restrictions on shipping and exports, while talks over a wider settlement have made little visible progress. The market reaction suggests traders see a growing probability that supply losses will not be resolved quickly, even if spare capacity and emergency stockpiles provide a buffer in the short term.
Oil’s latest rise follows weeks of volatility shaped by alternating hopes for diplomacy and fears of escalation. Prices had eased earlier when signs of possible talks emerged, only to rebound as negotiations faltered and shipping through the Gulf remained constrained. Brent’s move towards $120 places the benchmark near levels last associated with major supply shocks, raising fresh inflation concerns across fuel, freight, aviation and petrochemicals.
Supply conditions have tightened beyond the immediate Iran-related risk. US crude inventories fell by more than 6 million barrels last week, while exports surged as overseas buyers sought alternative barrels. Stronger demand for US crude has helped absorb domestic supply and added upward pressure to global prices. Gasoline and distillate stocks also declined, increasing sensitivity ahead of the northern hemisphere summer travel season.
OPEC+ is expected to consider a modest output quota increase of about 188,000 barrels per day, but the scale is unlikely to offset a prolonged disruption in Gulf flows. The group’s ability to stabilise the market is being tested by geopolitical constraints, uneven spare capacity and internal pressures among producers. Even where output can be raised, logistical limits and shipping risks may prevent barrels from reaching buyers quickly.
For import-dependent economies, the rally carries immediate fiscal and inflationary implications. Higher crude prices raise the cost of petrol, diesel, aviation turbine fuel and petrochemical feedstocks. Governments that subsidise fuel or manage retail prices face renewed pressure on budgets, while consumers may see higher transport and utility costs if the rally persists. Energy-intensive industries, including airlines, shipping, chemicals and manufacturing, are likely to face margin pressure.
The impact on Asia is particularly significant. China, Japan, South Korea and India remain major crude importers, while several Gulf suppliers form a core part of their energy security arrangements. A prolonged disruption could push refiners to seek more cargoes from the United States, West Africa, Latin America and Russia, altering trade flows and increasing freight costs. Refining margins may widen for some operators, but the benefit could be offset by higher working capital requirements and uncertainty over crude availability.
Financial markets are also watching the inflation effect. A sustained rise in oil prices complicates the outlook for central banks by adding cost pressure at a time when policymakers are still assessing the durability of price stability. Higher fuel costs can filter through supply chains and consumer expectations, reducing the room for interest-rate cuts in major economies.