Oil prices experienced a sharp surge on Thursday as President Donald Trump deliberated whether to resume large-scale U.S. military operations against Iran in the coming weeks [1]. Brent crude oil rose more than 5% to over $105 per barrel in early trading, while U.S. crude oil climbed nearly 5% to almost $93 per barrel. Benchmark diesel futures increased by 4.5% in European trading, and heating oil, which serves as a proxy for jet fuel, advanced more than 4% [1].
The escalation in oil prices had a ripple effect across financial markets. The 10-year Treasury yield, a key benchmark for consumer borrowing rates, jumped to 5.35%, reversing a previous decline seen late Wednesday. Yields on all other Treasury bonds also rose. In equities, U.S. stock futures fell in response to the geopolitical uncertainty: S&P 500 futures dropped 0.6%, Nasdaq 100 futures slid 0.8%, and Russell 2000 futures, which track small and medium-sized companies, declined by 1% [1].
No final decision has been made regarding the resumption of combat operations in Iran, according to sources familiar with the discussions. However, the potential for renewed U.S. strikes represents a significant escalation in the ongoing conflict and could end the three-month stalemate between Washington and Tehran. The possibility of U.S. military action was first reported by The Atlantic on Wednesday [1].
The conflict has already impacted global oil supply chains. Smaller-scale Iranian attacks on commercial shipping have reduced traffic through the Strait of Hormuz—a vital passage for global oil supplies—to fewer than 23 ships per day between September 28 and October 4, compared to hundreds per day before the war. This disruption has contributed to rising oil prices and increased shipping costs, with the price to move U.S. oil to Asia reaching $77 million per crude carrier, according to Bloomberg and Baltic Exchange data [1].
Market analysts warn that any escalation in the Iran conflict could push oil prices even higher. Francisco Blanch, Bank of America's head of global commodities, stated that if skirmishes continue to curb oil flows through year-end, Brent could trade in a $95-$120 per barrel range. In the event of a broader conflict causing major energy infrastructure damage, prices could spike as high as $150 per barrel [1].
CONCLUSION
The prospect of renewed U.S. military action against Iran has driven oil prices sharply higher and triggered declines in stock futures, reflecting heightened market anxiety. With shipping disruptions already straining global oil supply and analysts warning of further price spikes, markets remain highly sensitive to developments in the region.