WTI crude surges 56% toward $112 as Iran conflict roils markets

West Texas Intermediate crude surged to $112.06 per barrel on Thursday, marking a 56% increase from a month ago and placing the commodity in the 99th percentile of its 12-month range. The rally caps a record-breaking month for oil markets, with international benchmark Brent crude soaring about 55% in March, its biggest monthly gain since the contract’s inception in 1988, according to data from CNBC.

The sharp repricing of geopolitical risk comes after US President Donald Trump’s national address on April 1 failed to outline a clear de-escalation path in the now month-long conflict with Iran. "Clearly, we seem to be on the latter path right now," George Efstathopoulos, a portfolio manager at Fidelity International, told CNBC, reflecting a risk-off sentiment that has gripped global investors and pushed other assets like stocks and cryptocurrency lower. The Nasdaq closed down 0.75% on Monday, giving up earlier gains.

Driving the surge are fears of a prolonged supply disruption in the Strait of Hormuz, a chokepoint for roughly 20% of the world’s oil shipments, where tanker traffic has ground to a halt since US-Israeli military strikes began on February 28. President Trump’s threats to “finish the job very fast” and Iran’s vows of “crushing attacks” have intensified fears of further escalation. Analysts from Oxford Analytica suggest that a resumption of commercial navigation through the strait is unlikely in the near term.

The conflict’s expansion is adding to supply anxieties. Yemen's Houthi forces claimed their first direct involvement, launching missiles at Israel over the weekend. This raises the potential for further disruption through the Bab el-Mandeb Strait, a key shipping channel to the Red Sea. Michael Haigh, global head of commodities research at Societe Generale, warned that if another four million barrels per day are taken out of the Red Sea, oil prices could move “much, much higher,” with the bank forecasting a potential spike to $150 per barrel in April under a prolonged disruption scenario.

What It Means for Markets

The sustained price increase is rippling through the global economy, with US unleaded gasoline futures (RB00) surging over 7% to $3.31. While Federal Reserve Chairman Jerome Powell said the central bank is inclined to look past the energy shock for now, helping soothe the bond market, the rally is fueling broader inflationary pressures.

For investors, the spike has boosted returns for energy companies and the ETFs that hold them, though the broader market is feeling the strain. Ed Yardeni, president of Yardeni Research, wrote in a note that global equities were beginning to reflect a “higher-for-longer” scenario for oil prices, which could raise recession risks. Investors are now closely watching for any diplomatic signals or military developments that could shift the volatile supply landscape.

This article is for informational purposes only and does not constitute investment advice.