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The price of crude freight for immediate delivery has risen to the highest level since 2008, as traders react to a possible escalation of the war in Iran and concerns about oil shortages.
Brent crude bought and sold in the North Sea reached $141.36 per barrel on Thursday, up from $128.46 a day earlier, according to a research group at S&P Global.
The wave followed a televised speech by US President Donald Trump on Wednesday in which he vowed to hit Iran “extremely hard” in the coming weeks and threatened to bomb the country “back to the Stone Age.”
Trump’s signal of a further escalation of the conflict instead of a peace deal caused oil prices to rise, catching market participants off guard by his rhetoric.
“The market once again completely misunderstood what President Trump was going to say. They expected de-escalation talks and got the exact opposite,” said Scott Shelton, energy specialist at TP ICAP, an interdealer broker. “The market was NOT positioned for this!”
The International Energy Agency has warned that the world is facing the worst oil supply disruption in history due to Iran’s effective closure of the Strait of Hormuz, the strategic waterway through which more than a fifth of global oil supplies flow.
Traders said Thursday that the price increase reflected concerns about how a protracted conflict with Iran would affect the supply of crude oil and other fuel products in the coming weeks and months.
Oil prices on the financial futures markets also moved higher on Thursday. The price of Brent oil, the international benchmark, was 7.8 percent higher at $109.03 per barrel. West Texas Intermediate rose more than 11 percent to close at $111.54 per barrel, the highest level since mid-2022.
Industry experts are increasingly focusing on the threat posed by shortages of crude oil and other petroleum products, including the effect it could have on the global economy.
Oxford Economics said this week that it estimates that a six-month disruption of oil flows through the Strait of Hormuz would create a 13 million barrels per day gap in global oil supplies, leading to a global recession.
“This represents an unprecedented shortfall of around 12 percent of consumption, leading to widespread rationing, concentrated in emerging economies, with significant impacts on business and supply chain disruption,” the advisory group said.
Additional reporting by Martha Muir
