Alexander Manzyuk | Reuters
Oil prices turned lower on Thursday shortly after Brent crude notched a four-year high on a report that the U.S. military would brief President Donald Trump on potential action against Iran.
Axios reported that the U.S. Central Command was set to present Trump plans for a possible military action against Iran, citing two sources with knowledge of the matter.
Trump had earlier reportedly rejected Tehran’s proposal to reopen the Strait of Hormuz, signaling the naval blockade will remain in place until a broader nuclear agreement is reached.
International benchmark Brent crude futures rose to a wartime high of $126 a barrel before erasing gains to trade at $115.81 per barrel, down 1.9% for the session. U.S. West Texas Intermediate futures, meanwhile, slipped 0.6% to trade at $106.26 as of 6:18 a.m. ET.
The latest moves come amid a multi-day rally for Brent and WTI, with both contracts up around 60% since the U.S. and Israeli-led war against Iran started on Feb. 28.
Brent oil prices
“The oil market has moved from over-optimism to the reality of the supply disruption we are seeing in the Persian Gulf,” Warren Patterson, head of commodities strategy at Dutch bank ING, said in a research note.
“The longer this disruption persists, the less the market can rely on inventory, and the greater the need for further demand destruction. The only way to drive this would be through higher oil prices,” he added.
Goldman Sachs estimates that exports through the Strait of Hormuz chokepoint have fallen to just 4% of normal levels, while stalled U.S.-Iran negotiations and a continued U.S. blockade tightening supplies.
Constrained Iranian exports and limited storage capacity could deepen supply disruptions if the blockade persists, the bank’s analysts said, adding that boost to output from the UAE following its OPEC exit is likely to materialize more gradually over the medium term rather than offsetting near-term tightness.
Trump issues new threat to Iran
Trump appeared to threaten Iran in a Truth Social post on Wednesday, saying the country “better get smart soon!”
“Iran can’t get their act together. They don’t know how to sign a nonnuclear deal. They better get smart soon!” Trump said. The post was accompanied by an AI-generated picture of Trump holding a gun with explosions in the background, and the words “NO MORE MR. NICE GUY!”
Bill Perkins, chief investment officer at Skylar Capital Management, said oil markets are being driven by a mix of physical disruptions, geopolitics and investor psychology, with traders closely tracking tanker movements and political signals as the U.S.-Iran conflict 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.
While strategic reserves and existing crude in transit have helped cushion oil prices, he described product markets as significantly more strained, highlighting sharp increases in diesel prices and ongoing logistical bottlenecks even if a ceasefire is reached
Goldman has flagged emerging downside risks to demand, noting global oil consumption in April may be about 3.6 million barrels per day lower than February levels, with weakness concentrated in jet fuel and petrochemical feedstocks.
Looking ahead, Perkins said oil could spike toward $140–$150 a barrel if disruptions persist, though elevated prices would eventually curb demand.
— CNBC’s Holly Ellyatt contributed to this report.
