- Brent crude surged as much as 7.1% to $126/barrel — its highest since Russia’s 2022 invasion of Ukraine — after Axios reported U.S. CENTCOM will brief Trump on new Iran military options Thursday.
- CENTCOM has prepared a plan for a “short and powerful” wave of strikes on Iranian infrastructure, and has separately requested hypersonic missiles be deployed to the Middle East for the first time.
- The Strait of Hormuz has been effectively closed since late February; the IEA has called the conflict the biggest oil supply shock in history, with Vitol estimating ~1 billion barrels of supply lost.
- U.S. crude exports hit a record above 6 million barrels per day last week as global buyers replace lost Middle Eastern supply with American barrels.
What Happened?
Oil markets exploded Thursday after Axios reported that Admiral Brad Cooper, head of U.S. Central Command, will brief President Trump on new military options for action against Iran — a signal that a resumption of combat operations is back on the table. Brent crude surged as much as 7.1% to $126 per barrel, its highest level since the aftermath of Russia’s invasion of Ukraine in early 2022, before settling near $122. CENTCOM has prepared a plan for a “short and powerful” wave of strikes on Iranian infrastructure, the report said, and has requested hypersonic missiles be sent to the Middle East — which would mark the first-ever operational deployment of those weapons by U.S. forces. The briefing mirrors one given to Trump on February 26, just before the U.S. and Israel launched the Iran war.
Why It Matters?
Markets had been pricing in a gradual move toward diplomacy. The Axios report ripped that assumption apart. With both sides still maintaining their respective Hormuz blockades, ceasefire talks stalled, and now fresh military contingency planning underway, the energy supply crisis has nowhere to go but deeper. The IEA has already declared the conflict the biggest oil supply shock in history. Vitol estimates roughly 1 billion barrels of supply has been lost. Now the prospect of a new bombing campaign threatens infrastructure damage that could take years to repair. As Westpac’s head of commodity research put it: “Both sides still think they are winning, neither side has a clear incentive to negotiate, and energy prices are starting to accelerate higher.”
What’s Next?
Thursday’s CENTCOM briefing will be a pivotal moment. If Trump decides to restart strikes, oil markets will face a demand-destruction spiral as prices become economically unbearable for importers — particularly in Asia, which is most exposed to the Hormuz closure. If Trump holds off, the market may partially stabilize, but structural tightness will remain until the strait reopens. U.S. crude exports already hit a record 6 million barrels per day as American producers fill the gap, but that capacity has limits. The Trump administration is simultaneously pursuing secondary sanctions on Iranian oil buyers and seeking the forfeiture of seized tanker cargoes — escalatory steps that suggest the economic and military pressure campaigns will intensify before any de-escalation is in sight.
Source: Bloomberg
