Brent crude futures surged past $120 per barrel in early trading Tuesday — the highest level since March 2022 — as markets priced in a growing risk premium for crude shipments transiting the Strait of Hormuz.
The International Energy Agency issued an unusual statement before the opening bell, warning that "escalating military activity in and around the Persian Gulf poses a material threat to global energy security." The IEA said it was consulting with member states about a potential coordinated release from strategic petroleum reserves.
The price surge represents a roughly 18% increase over the past two weeks. West Texas Intermediate, the U.S. benchmark, rose in tandem to $116.40 per barrel. Gasoline futures also climbed, with analysts at Goldman Sachs warning that U.S. consumers could see pump prices rise by 30 to 50 cents per gallon within 10 days.
"The market is starting to price in a scenario where one or more tankers are struck," said Nadia Petrov, chief commodities strategist at Barclays. "Even a single confirmed incident in the Strait would likely send Brent to $140 overnight."
The Strait of Hormuz, a 21-nautical-mile-wide chokepoint between Iran and Oman, handles roughly 21 million barrels of crude and petroleum products daily — about one-fifth of global consumption. Insurance underwriters at Lloyd's of London have designated the Strait a "high-risk area," and war-risk premiums for vessels transiting the waterway have reportedly tripled since late June.
Several major shipping lines, including Maersk and Hapag-Lloyd, said they were reviewing routing decisions but had not yet suspended Gulf transits. A Maersk spokesman described the situation as "under close and continuous assessment."