Global oil prices surged to their highest levels since 2022 after reports that the United States military is preparing new plans for potential action against Iran, raising fears of further escalation in the ongoing conflict.
According to a report by Axios, U.S. Central Command has drafted proposals for a wave of “short and powerful” strikes aimed at breaking the current deadlock in negotiations with Tehran. The White House and U.S. Central Command have not officially confirmed the report.
Benchmark Brent crude rose by nearly 7 percent, briefly exceeding $126 per barrel during Asian trading, marking its highest level since the early stages of the Russia's invasion of Ukraine.
Prices later retreated to around $116 per barrel during European trading, but remained significantly elevated amid persistent concerns about supply disruptions and geopolitical risks.
The surge comes as tensions intensify around the Strait of Hormuz, a vital shipping route through which roughly a fifth of the world’s oil supply typically passes. The waterway remains effectively closed, severely impacting global energy flows.
The United States has indicated it may continue a blockade of Iranian ports as long as Tehran threatens vessels attempting to transit the strait, further tightening supply conditions in global markets.
In response, Iran has warned it could target ships in the region following recent U.S. and Israeli airstrikes, escalating fears of a broader confrontation that could disrupt energy shipments on a massive scale.
Oil prices had already climbed by about 6 percent earlier in the week on reports that Washington was considering an extended blockade, with markets reacting sharply to any sign of prolonged instability.
The rise in crude prices is already being felt by consumers, as oil remains a key component in petrol and diesel production, pushing fuel costs higher across major economies.
Beyond fuel, the impact is expected to ripple through global supply chains, with governments warning of rising costs for energy, food, and transportation, including airline tickets.
Several airlines have already begun increasing fares or cutting flights, while fertiliser prices—particularly urea—have surged, raising concerns about future food price inflation.
Analysts say the current situation reflects growing fears of escalation. Naveen Das, a senior oil analyst at Kpler, warned that prices approaching $125 per barrel tend to heighten market anxiety and could trigger renewed efforts toward de-escalation.
He noted that rising oil prices have a broad economic impact, influencing not only fuel costs but also inflation and the price of a wide range of goods and services.
Susannah Streeter, chief investment strategist at Wealth Club, said the effects could extend well into next year, as higher input costs filter through supply chains, ultimately raising the price of everyday goods.
Meanwhile, financial markets showed mixed reactions, with Asian stocks declining, Japan’s Nikkei and South Korea’s Kospi both closing lower, while European markets posted mixed performances, reflecting uncertainty over the economic fallout of a prolonged crisis.
