Global oil prices climbed to their highest level in six weeks on Thursday as escalating tensions between the United States and Iran heightened fears of supply disruptions in the Middle East. Investors rushed to secure crude supplies after reports of continued US military strikes on Iranian-linked targets raised concerns that the conflict could affect one of the world’s most critical oil-producing regions.
Brent crude, the international benchmark, rose close to $96 a barrel, while US West Texas Intermediate (WTI) also extended gains, reflecting growing anxiety in global energy markets. The rally marks one of the strongest weekly performances for crude this year, driven largely by geopolitical risks rather than changes in demand.
The latest jump in crude oil prices follows reports that US forces carried out strikes against Iranian-backed military positions for the twelfth consecutive night. While neither Washington nor Tehran has signalled a willingness to broaden the conflict, markets remain concerned that prolonged hostilities could threaten oil infrastructure or disrupt shipping routes through the Strait of Hormuz.
The Strait of Hormuz is one of the world’s most important energy corridors, with nearly a fifth of global oil supplies passing through the narrow waterway every day. Any disruption in the region has the potential to send oil prices sharply higher, affecting economies across the world.
Energy traders said markets are pricing in a higher geopolitical risk premium as uncertainty continues to grow. Although global oil production remains largely unaffected so far, investors fear that any escalation involving major oil-producing nations could quickly tighten supplies.
“The market is reacting more to the possibility of disruption than to actual supply losses,” said an energy analyst. “When tensions rise in the Middle East, oil prices tend to move higher because traders anticipate risks before they materialise.”
Apart from geopolitical developments, falling US crude inventories have also supported prices. Recent data showed a larger-than-expected decline in American oil stockpiles, indicating healthy demand during the peak summer driving season. Strong fuel consumption in the United States has added further momentum to the upward trend in crude prices.
The rise in oil prices is being closely watched by governments and businesses worldwide because it has a direct impact on inflation. Higher crude prices usually translate into increased costs for petrol, diesel, aviation fuel and transportation, eventually pushing up the prices of food, manufactured goods and other essential commodities.
For India, which imports more than 85 per cent of its crude oil requirements, sustained high prices could increase the country’s import bill and put pressure on the rupee. Rising oil costs may also complicate inflation management and influence future policy decisions by the Reserve Bank of India.
Consumers may not feel the impact immediately, but prolonged increases in global crude prices often lead to higher fuel costs over time. Industries such as aviation, logistics, shipping and manufacturing are particularly sensitive to fluctuations in oil prices because fuel represents a significant share of their operating expenses.
Despite the recent rally, analysts believe future price movements will depend largely on geopolitical developments. If tensions between the US and Iran ease, some of the current risk premium could disappear, allowing prices to stabilise. However, any further military escalation or disruption to shipping lanes could trigger another sharp spike in global oil markets.
Market participants are also monitoring decisions by the OPEC+ alliance, which continues to play a crucial role in balancing global supply. Any unexpected production changes by major exporters could further influence crude prices in the coming weeks.
Financial markets have also reacted cautiously to rising energy costs. Higher oil prices tend to increase inflation expectations, making central banks more cautious about cutting interest rates. Investors are therefore watching both geopolitical events and upcoming economic data for clues about the global growth outlook.
For households around the world, rising oil prices often mean higher transportation costs and increased prices for everyday goods. For businesses, especially those dependent on fuel, the latest surge serves as a reminder of how quickly geopolitical conflicts can influence global markets.
With the Middle East remaining at the centre of global attention, energy markets are expected to remain volatile. Traders will continue to closely track military developments, supply conditions and economic indicators to assess whether crude oil prices will extend their rally or retreat once geopolitical tensions begin to ease.
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