Brent crude crossed $126 a barrel Thursday morning, a four-year high, after Axios reported that U.S. Central Command was preparing to brief President Donald Trump on potential military action against Iran. The news rattled energy markets already strained by a sustained American naval blockade of Iranian oil exports.
June futures for international benchmark Brent briefly hit $126 before pulling back to $121.84 per barrel, up 3.4%, as of early Thursday morning Eastern time. U.S. West Texas Intermediate added 1% to $107.98 per barrel in the same period.
The spike follows Trump's reported rejection of Tehran's proposal to reopen the Strait of Hormuz, the critical chokepoint through which a significant share of the world's oil supply flows. Trump had posted a warning on Truth Social on Wednesday, writing: "Iran can't get their act together. They don't know how to sign a nonnuclear deal. They better get smart soon!" The post included an AI-generated image of Trump holding a gun against a backdrop of explosions, captioned "NO MORE MR. NICE GUY!"
Goldman Sachs, in analysis cited by CNBC, estimates that exports through Hormuz have collapsed to just 4% of normal levels. The bank's analysts warned that constrained Iranian exports combined with limited storage capacity could deepen supply disruptions if the blockade holds. A boost to output from the UAE following its exit from OPEC is expected to materialize gradually over the medium term, the bank said, offering little relief to near-term supply tightness.
Goldman also flagged demand-side risks, noting that global oil consumption in April may be running about 3.6 million barrels per day below February levels, with weakness concentrated in jet fuel and petrochemical feedstocks.
Bill Perkins, chief investment officer at Skylar Capital Management, said the market is being driven by a combination of physical supply disruptions, geopolitics, and investor sentiment. Traders are closely monitoring tanker movements and political signals as the standoff drags on. "We're kind of far apart from a deal, and maybe hostilities or a little bit more time is needed to open up the Strait of Hormuz," he said. Perkins described product markets as significantly more strained than crude markets, pointing to sharp increases in diesel prices and logistical bottlenecks that would persist even if a ceasefire were reached.
Strategic reserves and existing crude in transit have helped cushion prices so far, but Perkins said oil could spike toward $140 to $150 a barrel if disruptions continue. At those levels, he noted, demand destruction would eventually follow.
