Global oil markets rose into renewed turmoil Thursday after crude prices climbed above the $100 per barrel mark, driven by escalating geopolitical tensions in the Middle East and mounting fears of a prolonged disruption to global energy supply.
The price spike followed a stark warning from Mojtaba Khamenei, Iran’s newly installed supreme leader, who declared that a vital global shipping route would remain closed as military hostilities involving Iran, the United States, and Israel intensify.
Speaking in his first public statement since assuming power following the death of his father, Ali Khamenei, Mojtaba Khamenei warned that Iran would not hesitate to retaliate against its adversaries and would continue to block a major maritime route central to global oil trade.
“ Iran will not shy away from avenging the blood of martyrs,” he said, according to Iranian state media, reinforcing fears that the conflict could spiral into a wider regional crisis with major consequences for energy markets.
The geopolitical escalation has rippled through global commodity markets.
Brent crude, the international benchmark for oil prices, surged 8.9 percent to $100.12 per barrel in Thursday trading, reclaiming the psychologically significant $100 level even after emergency measures by energy authorities to calm markets.
Earlier in the week, Brent crude briefly jumped close to $120 per barrel amid heightened fears of supply disruptions.
Meanwhile West Texas Intermediate crude, the main U.S. benchmark, climbed 9.3 per cent to $95.30 per barrel.
Market analysts say the latest price hike reflects a growing geopolitical risk premium embedded in energy markets as investors brace for the possibility of a prolonged disruption to global supply.
“The evolving situation is keeping a significant geopolitical risk premium embedded in energy markets,” said Laurence Booth, global head of markets at CMC Markets.
Concerns intensified further after reports emerged that multiple oil tankers had been attacked in waters near Iraq and Kuwait, raising fears that energy infrastructure and maritime routes could increasingly become targets in the expanding conflict.
Video footage circulating online showed two tankers engulfed in flames following strikes reportedly attributed to Iranian forces. According to Iraqi officials, the attacks resulted in at least one fatality.
Farhan al-Fartousi, director of Iraq’s General Company for Ports, confirmed that Iraqi rescue teams were evacuating crew members from the burning vessels while efforts continued to contain the situation.
He also disclosed that Iraq had temporarily shut down its oil ports following the attack, with reports indicating that fuel had spilled into surrounding waters.
In a separate incident, the United Kingdom Maritime Trade Operations said a third ship was struck by an unidentified projectile near Dubai.
The escalating maritime attacks have prompted several regional countries to suspend operations at key oil terminals.
Both Oman and Iraq have reportedly halted activities at some oil facilities as authorities assess the security risks posed by the rapidly deteriorating situation.
At the centre of global market anxiety is the Strait of Hormuz, one of the world’s most important energy chokepoints.
About one-fifth of global oil and liquefied natural gas shipments pass through the narrow waterway each day, linking the oil-rich Gulf region to international markets.
Shipping companies have begun drastically scaling back operations through the strait amid security concerns, while insurers are reportedly reluctant to provide coverage for vessels entering the high-risk zone.
Container shipping firms have largely suspended transit through the corridor, creating a logistical bottleneck that analysts warn could rapidly tighten global oil supply.
The International Energy Agency warned Thursday that the ongoing Middle East conflict could trigger the largest supply disruption in the history of the global oil market.
In its latest report, the agency said crude and refined product flows through the Strait of Hormuz had slowed dramatically to what it described as a “trickle.”
Before the conflict erupted in late February, the route carried about 20 million barrels of oil per day.
Now, with shipping severely constrained and storage facilities rapidly filling up, major Gulf producers have been forced to slash production.
The IEA estimates that oil output in the region has fallen by at least 10 million barrels per day.
“In the absence of a rapid resumption of shipping flows, supply losses are set to increase,” the agency warned.
Globally, oil supply is projected to fall by roughly 8 million barrels per day in March, with limited increases from producers such as Russia and Kazakhstan only partially offsetting the losses.
In an effort to stabilise markets, the IEA announced the release of a record 400 million barrels of oil from strategic reserves held by member countries.
Separately, Donald Trump said the U.S. would release 172 million barrels from its Strategic Petroleum Reserve to help cushion global supply.
However, analysts warn that emergency stockpiles may only provide temporary relief if the geopolitical crisis continues to escalate.
The conflict is already sending shockwaves through international energy supply chains.
According to Reuters, China has temporarily halted exports of refined fuel in March as authorities move to safeguard domestic supply amid fears of prolonged disruptions linked to the Iran conflict.
The move highlights the growing global ramifications of a crisis that began in the Middle East but is now influencing energy markets and trade flows worldwide.
Analysts at ANZ Bank warned that markets may still be underestimating the duration and severity of the disruption.
“Once a conflict extends beyond the initial shock phase, oil markets tend to shift from pricing uncertainty to pricing endurance. At that point, the key question is no longer whether supply is disrupted, but how long producers can physically sustain output under deteriorating operating conditions,” ANZ analysts said in a research note.
