Oil price hits highest since 2022 after report Trump to be briefed on new Iran options

Global oil prices surged to their highest levels since 2022 following reports that the US military is preparing to present President Donald Trump with new strategic options regarding Iran.

According to Axios, US Central Command has developed a comprehensive plan featuring "short and powerful" strikes targeting Iran, designed to break the current diplomatic deadlock. The BBC has reached out to both US Central Command and the White House for official comment on these reports.

Brent crude experienced a dramatic surge of nearly 7%, reaching over $126 per barrel at its peak—marking the highest price point since Russia's full-scale invasion of Ukraine in 2022. This significant price movement reflects heightened market concerns over potential military escalation in a region critical to global energy supplies.

Energy markets have experienced considerable volatility throughout the week as diplomatic negotiations have stalled, with the strategically vital Strait of Hormuz waterway remaining effectively closed to commercial shipping. After touching $126.31 per barrel during Asian trading hours, Brent crude prices moderated to approximately $116 during European market sessions.

Broader Economic Impact Beyond Energy Sector

The implications of rising crude oil prices extend far beyond fuel costs, affecting multiple sectors of the global economy. As a fundamental component of gasoline and diesel production, oil price increases directly translate to higher costs at gas stations worldwide.

Current data from the RAC motoring group shows UK petrol prices averaging 157 pence per liter—a 24-pence increase from pre-conflict levels. Diesel prices have experienced an even steeper rise, reaching nearly 189 pence per liter, representing a 46-pence premium compared to pre-war pricing.

The UK government has issued warnings about potential price increases across multiple sectors, including energy, food, and airline tickets. Several airlines have already implemented fare increases or reduced flight schedules in response to elevated fuel costs. Additionally, fertilizer prices have begun climbing, potentially creating ripple effects throughout food supply chains and ultimately impacting consumer prices.

Strategic Military Considerations

Anonymous sources cited in the Axios report indicate that proposed military strikes would likely target critical infrastructure. A secondary plan under consideration involves securing portions of the Strait of Hormuz to enable commercial shipping resumption, potentially requiring ground force deployment.

The current Brent futures contract for June delivery approaches its Thursday expiration date, while the more actively traded July contract was valued at approximately $110 per barrel. Futures contracts represent binding agreements to purchase or sell assets at predetermined future dates.

The United States has declared its intention to maintain a blockade of Iranian ports as long as Tehran continues threatening vessels attempting to transit the Strait of Hormuz, significantly disrupting global energy transportation networks. Iran has responded to US-Israeli airstrikes by threatening attacks on ships using the waterway, through which approximately 20% of global energy supplies typically flow.

Market Analysis and Expert Perspectives

Wednesday's trading session saw oil prices surge 6% following reports of Washington's preparations for an "extended" Iranian blockade. Industry analysts are closely monitoring these developments for broader market implications.

"Escalation in the conflict appears to be back under consideration, whether through continued US blockade actions in Iran or reports suggesting Iran may resume attacks to resolve the current impasse," explained Naveen Das, senior oil analyst at Kpler.

Das noted that oil prices approaching $125 per barrel represent a threshold where businesses and political leaders "begin experiencing increased anxiety." He anticipates potential de-escalation efforts as price increases create cascading effects across oil-related products, inflation rates, and daily economic activities.

Susannah Streeter, chief investment strategist at Wealth Club, projects that elevated costs may persist into the following year. "Urea shipments essential for fertilizer production are blocked, causing dramatic cost increases for farmers worldwide who failed to secure advance inventory," Streeter observed. "The concern is that these costs will be transmitted through supply chains, increasing prices for everyday goods later this year and into next year."

The Strait of Hormuz: Global Energy Lifeline

The Strait of Hormuz represents one of the world's most critical maritime chokepoints, situated between Iran, the United Arab Emirates, and Oman. This narrow waterway, measuring approximately 21 miles at its narrowest point, connects the Persian Gulf to the Gulf of Oman, serving as an indispensable global shipping corridor.

Under normal conditions, roughly 20% of global oil and liquefied natural gas transits through the Strait of Hormuz. This energy flow originates not only from Iran but also from Gulf nations including Iraq, Kuwait, Qatar, Saudi Arabia, and the UAE.

According to US Energy Information Administration estimates, approximately 20 million barrels of oil passed through the waterway daily in 2025, representing nearly $600 billion in annual energy trade. Maritime traffic has decreased significantly since the conflict began.

EIA data from 2022 indicates that approximately 82% of crude oil and other fossil fuels exiting the Strait of Hormuz were destined for Asian markets. China alone purchases an estimated 90% of Iran's oil exports.

Growing Economic Concerns and Market Response

Sources indicate that energy executives met with President Trump on Tuesday to discuss strategies for minimizing the conflict's impact on US consumers, intensifying market concerns about prolonged energy supply disruptions.

"The fundamental question is how long the Trump administration can withstand the economic pressure," noted Will Walker-Arnott, investment manager at Raymond James. "There are growing concerns about inflationary impacts stemming from rising oil prices."

Asian stock markets closed lower, with Japan's Nikkei declining 1.1% and South Korea's Kospi falling 1.4%. European markets showed mixed results, with London's FTSE 100 gaining 1%, Germany's DAX advancing 0.3%, while France's CAC declined 0.6%.

These market movements reflect investor uncertainty about the conflict's duration and potential for further escalation, underscoring the global economy's vulnerability to geopolitical tensions in energy-producing regions.