Oil Prices Surge on Fears of Extended Supply Disruption and Iran Port Blockade

Oil prices surged more than 6% in Wednesday trading, closing at their highest level in weeks, driven by fears of prolonged supply disruptions in the Strait of Hormuz and the U.S.-led blockade of Iranian ports.

According to Reuters, U.S. West Texas Intermediate crude rose 6.95% to settle at $106.88 per barrel. International benchmark Brent crude climbed 6.08%, or $6.77, to $118.03 a barrel, after touching its highest since June 2022. On Thursday morning, Brent for June delivery continued to rise to $119.94, while WTI stood at $107.51.

The escalation came as the two-month-long conflict between the U.S.-Israel alliance and Iran showed no sign of ending, and fuel supplies remained clogged at the Strait of Hormuz — where Iranian forces have imposed a shipping blockade and the U.S. has been surrounding Iranian ports.

A White House official said Wednesday that President Donald Trump had convened oil companies to discuss measures to mitigate the impact of a blockade that could last months. The president and oil executives “discussed steps President Trump has taken to reduce pressure on global oil markets, as well as potential measures to sustain the current blockade for months if needed, to minimize the impact on American consumers,” the official said.

News of Trump’s talks with oil executives fueled concerns over a prolonged supply disruption, according to Reuters. This came as the Pentagon revealed for the first time that the war with Iran had cost the U.S. military $25 billion.

“The outlook for any short-term resolution to the Iran conflict or the reopening of the Strait of Hormuz remains very bleak,” said IG market analyst Tony Sycamore.

Barnaby Lo, an Al Jazeera correspondent in Seoul, South Korea, said nearly the entire Asia-Pacific region relies on oil imports, most of which come from the Middle East. “With Brent hitting $120 a barrel, there will certainly be a huge impact on the region. The Asian Development Bank has cut its growth forecast for the region from 5.1% to 4.7% this year,” Lo said. “Millions, even billions, of people in the region are enduring soaring fuel prices alongside skyrocketing food and basic commodity costs.”

On the same day, President Trump welcomed the announcement by the United Arab Emirates that it was leaving the Organization of the Petroleum Exporting Countries. “I think it’s great,” he said. He described UAE President Mohamed bin Zayed Al Nahyan as “very smart” and likely wanting to go his own way. “Ultimately, I think it’s good for lowering gas prices, lowering oil prices, lowering everything,” Trump added.

The UAE said it would exit OPEC and the wider OPEC+ alliance as of May 1. Experts said the move had been expected, as the UAE was frustrated with OPEC’s production-cap policy aimed at controlling prices and stabilizing markets. However, analysts told Al Jazeera that the UAE’s departure is unlikely to have an immediate impact on markets, because its exports, like those of its neighbors, are currently constrained by Iran’s control of the Strait of Hormuz. Wood Mackenzie analysts noted: “Gulf states, including the UAE, will take months to restore production to pre-war levels.”