On Thursday, oil prices reached a four-year high following report that the U.S. military is scheduled to brief President Donald Trump on potential action against Iran. The development has intensified concerns over a possible resumption of armed conflict and further builds upon the existing American blockade on Iranian oil exports. Additionally, the U.S. Central Command is preparing to present President Trump with plans for possible military measures targeting Iran. Earlier reports indicated that Trump had rejected Tehran’s proposal to reopen the Strait of Hormuz, signaling that the naval blockade will remain in effect until a broader nuclear agreement is reached.
As a result, June futures for Brent crude, the international benchmark, surged by 6.84 percent to USD 126.10 per barrel, while West Texas Intermediate rose by 3.14 percent to USD 110.24 per barrel. Data from the London Stock Exchange Group (LSEG) shows that Brent crude has climbed to its highest levels since early 2022, as ongoing conflict in the Middle East continues to constrain global supplies. In a social media post on Wednesday, President Trump appeared to issue a warning to Iran, stating that the country “better get smart soon.” He further remarked that Iran “can’t get their act together” and does not know how to sign a non-nuclear deal, adding, “They better get smart soon”.
Oil Exports Through Hormuz Plunge
Goldman Sachs estimates that exports passing through the Strait of Hormuz have fallen to just four percent of normal levels, owing to stalled U.S.-Iran negotiations and the sustained American blockade, which continues to tighten supplies. According to the bank’s analysts, constrained Iranian exports and limited storage capacity could escalate supply disruptions should the blockade persist.
They added that any increase in output from the United Arab Emirates following its departure from OPEC is likely to materialize only gradually over the medium term and will not offset near-term supply tightness. Nevertheless, Goldman Sachs also highlighted emerging downside risks to global demand, noting that worldwide oil consumption in April may be approximately 3.6 million barrels per day lower than February levels, with weakness concentrated particularly in jet fuel and petrochemical feedstocks.
