Oil Prices Surge Toward $100 as Iran War Escalation Threatens Global Energy Supply
WASHINGTON-- Oil prices surged Thursday to their highest levels in nearly two months as fears grew that the expanding Iran conflict could disrupt a critical artery of the global energy market.
Brent crude, the international benchmark, jumped 7% to close at $100.69 a barrel after briefly climbing above $102 — its highest level since late May. U.S. crude also extended its rally, rising 6.2% to $92.19 a barrel, its highest close since early June.
The latest spike came after Iran-backed Houthi rebels claimed they attacked two Saudi oil tankers in the Red Sea and announced a naval blockade against the kingdom. The strikes marked a potential expansion of the conflict beyond the Strait of Hormuz, where shipping traffic has already been severely disrupted.
The development rattled energy markets because the Bab el-Mandeb Strait, a vital shipping route connecting the Red Sea to global markets, handles roughly 12% to 15% of worldwide maritime trade, valued at more than $1 trillion annually.
The waterway has also become an increasingly important alternative route as traffic through the Strait of Hormuz — one of the world’s most critical oil chokepoints — has fallen sharply amid the conflict.
Oil prices have climbed about 35% since the beginning of the month and are now more than 60% higher than they were at the start of the year.
Consumers are already feeling the impact. The national average price for gasoline rose Thursday to $4.09 per gallon, up from $4.06 the previous day, according to AAA data tracked by NBC News.
The increase has erased much of the relief markets saw after the United States and Iran reached a memorandum of understanding in mid-June. That agreement has since collapsed, with President Donald Trump warning Wednesday that the U.S. would target Iranian infrastructure, including bridges and power plants, in response to attacks on vessels.
Hours later, reports emerged of the alleged Red Sea tanker attacks.
The United Kingdom Maritime Trade Operations reported a tanker was “struck by an unknown projectile” north of the Bab el-Mandeb Strait. Saudi state media also reported that the tanker Encelia caught fire after an attack in the Red Sea, citing an unnamed transportation official.
The widening conflict has reignited fears of a new inflation wave.
“Inflation has remained top of the agenda for markets this morning,” said Jim Reid, Deutsche Bank’s global head of macro research. He warned that escalating U.S.-Iran tensions and the Houthi attacks were raising concerns that the conflict could spread further.
Those inflation fears pushed bond yields higher Thursday, with the benchmark 10-year Treasury yield reaching 4.7%, its highest level since January 2025. Higher Treasury yields can translate into increased borrowing costs for consumers.
Mortgage rates also moved higher, with the average 30-year fixed mortgage rate climbing to 6.85% Wednesday, its highest level since July 2025.
Wall Street reacted to the energy shock and renewed inflation concerns. The S&P 500 dropped more than 1.3%, while the Nasdaq fell 2.4%, with much of the decline concentrated in technology stocks following disappointing investor reactions to earnings from Alphabet and Tesla.
With oil markets now watching the Strait of Hormuz and the Red Sea simultaneously, investors are bracing for the possibility that the Iran conflict could have consequences far beyond the battlefield.