Oil surges to 52-week highs as US-Iran tensions threaten Middle East supply

Oil markets jolted higher on Friday as the escalating conflict between the United States and Iran sent traders scrambling to price in the risk of a Middle East supply shock. Brent crude, the global benchmark, climbed 4.5 percent to $89.23 a barrel—a level not seen in nearly two years and the highest in fifty-two weeks. West Texas Intermediate, the US standard, surged even more sharply, rising 6.3 percent to $86.06, its strongest showing since April 2024. The moves were sharp enough to put crude on track for its biggest weekly gain since Russia's invasion of Ukraine in early 2022.

The immediate trigger was a warning from Qatar's Energy Minister Saad al-Kaabi, who told the Financial Times that the ongoing conflict could force Gulf oil exporters to shut down production within days if tensions continue to escalate. More alarming still, he cautioned that crude prices could spike to $150 a barrel in the coming weeks if oil tankers lose the ability to transit the Strait of Hormuz, the narrow waterway through which roughly a third of the world's seaborne oil passes. Kaabi said he expected all Gulf exporters to invoke force majeure—a legal declaration that unforeseen circumstances prevent them from meeting contractual obligations—adding that those who failed to do so would face potential liability for breaching their commitments.

The Strait of Hormuz has become the focal point of market anxiety. Traffic through the chokepoint has already slowed dramatically as the conflict spreads across the region and disrupts energy production. For oil-importing nations and energy-dependent economies, the prospect of a sustained closure is existential. India, the world's third-largest oil importer, received a brief reprieve when the United States granted it a thirty-day waiver to resume purchases of Russian crude, a move that provided momentary relief to markets. Washington had previously imposed 25 percent penalty tariffs on Indian oil purchases from Russia, though those were revoked last month.

The price surge is already rippling through consumer economies. The average price for a gallon of regular gasoline in the United States climbed nearly 27 cents over the past week, reaching $3.25, according to data from AAA. The White House, meanwhile, is preparing its own response. A Reuters report citing a US Treasury official indicated that the administration is developing measures aimed at controlling energy price spikes, including possible interventions in the oil futures market—a tool rarely deployed but available when policymakers judge the situation warrants it.

The conflict itself entered its seventh day on Friday with no sign of de-escalation. US Defense Secretary Pete Hegseth said during a Thursday press conference that the United States had "only just begun to fight," and warned that Iran was making a "really bad miscalculation" if it believed America could not sustain the effort. That language—suggesting the confrontation is still in its early stages—only deepened market fears that supply disruptions could persist or worsen in the weeks ahead. For now, traders are pricing in the worst-case scenario: a prolonged standoff that chokes off Middle Eastern oil and forces the world to compete for scarce barrels at whatever price the market will bear.