Osmond ChiaAnd
Faarea Masud,Economic journalists
Costfoto/NurPhoto via Getty Images
Oil prices hit their highest level since 2022 after a report that the US military is set to brief President Donald Trump on new plans for potential action in the Iran war.
The US Central Command has prepared a plan for a wave of “short and powerful” strikes against Iran to try to break the deadlock in negotiations with Tehran, the Axios news site reported. The BBC has contacted US Central Command and the White House for comment.
Brent crude rose almost 7% to more than $126 (£94) a barrel at one point, the highest level since Russia’s full-scale invasion of Ukraine.
Energy prices have risen this week as peace talks appear to have stalled, with the main Strait of Hormuz waterway still closed.
After reaching $126.31 per barrel during Asian trading, the price of Brent crude fell back to around $122 during early trading in Europe.
The Axios report cites unnamed sources, saying the proposed wave of strikes would likely include infrastructural targets.
Another plan aimed to retake part of the Strait of Hormuz so it could be reopened to commercial shipping, Axios reported, adding that this could involve troops on the ground.
U.S.-traded West Texas Intermediate crude also rose, up 1.4% to around $108 a barrel.
The current Brent futures contract for June delivery is due to expire on Thursday. The July contract, the most active, rose about 1.7% to around $112 a barrel.
Futures contracts are agreements to buy or sell an asset on a fixed date.
Oil traders reacted quickly to the possibility of further military action in the Gulf, said economics professor Yeow Hwee Chua of Nanyang Technological University.
Even a small risk of conflict escalation could have “outsized implications” for global energy supplies, he added.
The United States has said it will blockade Iranian ports as long as Tehran continues to threaten ships attempting to use the Strait of Hormuz, seriously disrupting global energy shipments.
Iran responded to U.S.-Israeli airstrikes by threatening to attack ships in the waterway, through which about a fifth of the world’s energy usually passes.
“It does appear that escalation of war is on the table again, whether under the cover of the continued US blockade of Iran, but also reports and rumors that, to break this impasse, Iran may start striking again,” said Naveen Das, senior oil analyst at Kpler.
He told the BBC’s Today program that an oil price approaching $125 was the point where businesses and politicians were “starting to get a little bit more nervous”.
“We could start to see perhaps more headlines about another attempt at de-escalation,” he added, as rising prices “have a ripple effect not only on oil, but on oil-related products, inflation and virtually every factor in our daily lives.”
The BBC understands that energy executives met with Trump on Tuesday to discuss ways to limit the impact of the war on US consumers, fueling market concerns about prolonged disruption to energy supplies.
“The big question in my mind is how long the Trump administration can take the economic heat,” Will Walker-Arnott, chief investment officer at Raymond James, told the Today program.
“People are really starting to worry about the inflationary impact of rising oil prices,” he added.
Asian stock markets closed lower, with Japan’s Nikkei down 1.1% and South Korea’s Kospi down 1.4%.
London’s FTSE 100 opened flat, but Germany’s Dax fell 0.6% and France’s Cac 1.2%.
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