Global Oil Price Hits 4-Year High: What It Means for Investors and Businesses in Oman
Global oil prices surged to a four-year peak, exceeding $122 per barrel on Thursday, driven by escalating concerns that the U.S.-Iran conflict could intensify, potentially causing prolonged disruptions to Middle Eastern oil supplies and negatively impacting global economic growth.
The market reaction followed a report from Axios, citing unnamed sources, that U.S. President Donald Trump was scheduled to receive a briefing on Thursday regarding plans for a series of military strikes against Iran. These strikes aim to pressure Iran into returning to negotiations over its nuclear program.
As of 0820 GMT, Brent crude futures, the global oil benchmark, had risen by $3.73 (3.2%) to $121.76 per barrel, after reaching an intraday high of $126.41 — the highest level since March 9, 2022. The June futures contract, set to expire on Thursday, led the movement, while the more active July contract stood at $111.89, up $1.45 (1.3%).
Since the U.S.-Israeli attacks on Iran began on February 28, Brent crude prices have doubled, while the U.S. West Texas Intermediate (WTI) crude has increased by approximately 90%. This surge is largely attributed to the effective closure of the Strait of Hormuz, a vital maritime chokepoint that handles about 20% of the world’s oil and liquefied natural gas shipments.
The sharp rise in oil prices threatens to trigger renewed spikes in global inflation and increase fuel costs in the U.S., complicating the economic landscape ahead of this year’s mid-term elections. John Evans of oil broker PVM commented, “Oil prices need little encouragement to tempt them higher at present.”
Both Brent and WTI benchmarks are on track for their fourth consecutive month of gains, underscoring widespread fears that the Iran conflict could severely restrict global oil supplies for an extended period.
Reflecting the likelihood of ongoing energy supply challenges, President Trump engaged with oil companies on Wednesday to discuss strategies for mitigating the potential impact of a prolonged U.S. blockade, according to a White House official.
Kelvin Wong, senior market analyst at OANDA, stated, “In the near term, market participants remain focused on the dynamics of the U.S.-Iran conflict and the risk of a prolonged closure of the Strait of Hormuz.” This concern currently overshadows longer-term issues, such as the possible diminishing influence of OPEC+ following the United Arab Emirates’ exit from the group.
On Tuesday, the UAE announced its departure from the Organisation of Petroleum Exporting Countries (OPEC) after nearly six decades of membership. This move complicates OPEC+’s efforts—an alliance of OPEC members plus Russia and other allies—to stabilize the oil market through coordinated supply adjustments, as the group will now control a smaller share of global oil production, sources within OPEC+ revealed.
Despite these developments, OPEC+ is expected to approve a modest increase in oil production quotas, approximately 188,000 barrels per day, at its meeting on Sunday. However, most producers are currently unable to ramp up output due to the ongoing closure of the Strait of Hormuz.
Analysts suggest the UAE’s departure from OPEC and OPEC+ could allow it to boost production once exports resume. Nevertheless, given the sustained disruptions caused by the Strait of Hormuz closure and ongoing conflict, this is unlikely to have immediate significant effects on market fundamentals.
In the current tight supply environment, analysts now anticipate that reduced oil demand driven by high prices may become the principal factor easing pressure on the market.
ING analysts estimate a loss of about 1.6 million barrels per day in demand as consumers and end-users cut back on oil usage due to elevated prices. Although this reduction is notable, “it’s clearly not enough to fill the supply gap we are currently facing,” the analysts noted.
Special Analysis by Omanet | Navigate Oman’s Market
The surge in global oil prices above $122 a barrel amid the escalating U.S.-Iran tensions underscores Oman’s strategic role as a key oil supplier near the Strait of Hormuz, with potential supply disruptions creating both risks of volatility and opportunities for increased revenue. Smart investors and entrepreneurs should prepare for sustained high oil prices, which may spur investments in energy infrastructure and diversification but also require caution due to geopolitical uncertainties and potential global economic slowdowns.
