Oil has hit its highest settlement since July 2022 as more Middle East supplies are disrupted

Oil prices rose to their highest in nearly four years on Friday, as Iraq declared force majeure on all oilfields developed by foreign oil companies and the Iran war escalated and the US deployed thousands of extra Marines and sailors to the Middle East.

Brent futures for May settled up $3.54, or 3.26%, at $112.19 a barrel, the highest since July 2022. US West Texas Intermediate crude futures for April, which expire on Friday, rose $2.18, or 2.27%, to settle at $98.32. More actively traded second-month US crude futures settled at $98.23, up 2.8%.

At the session high, Brent crude futures rose more than $4.

The US-Israeli war on Iran shows no sign of abating, with attacks on key energy infrastructure in Iran and attacks by that nation on its neighbors, including Saudi Arabia, Qatar and Kuwait.

“This is the worst-case scenario, not only do we have force majeure in Iraq, but with significant US troop amassing in the Persian Gulf, hopes of a quick resolution and return of supplies to the global market through the Strait of Hormuz are disappearing before our eyes,” said John Kilduff, partner at Again Capital.

Brent rose about 8.8% for the week, while front-month WTI settled down about 0.4% from last Friday’s close. WTI’s discount to Brent hit an 11-year high on Wednesday.

The oil market is starting to build on expectations of prolonged supply shut-ins following the attacks and several weeks – at least – before the crucial Strait of Hormuz is reopened.

“A quick reversal in energy prices is unlikely as production has suffered,” said Ole Hansen, head of commodity strategy at Saxo Bank.

On Friday, US President Donald Trump said there are no leaders left to talk war in Iran as military strikes continue to target Iranian officials. He also reiterated his demand that Iran not have nuclear weapons.

Israel and Iran launched fresh attacks on Friday after a hit on an oil refinery in Kuwait. Trump said on Thursday that Israel would not repeat attacks on energy facilities.

On Friday, US Energy Secretary Chris Wright said the lifting of oil sanctions on stranded waterborne Iranian cargoes would provide supplies to Asia in three to four days. On Thursday, US Treasury Secretary Scott Besant outlined those plans.

Besant said further crude releases from the US Strategic Petroleum Reserve are possible. Wright said the reserve will be released in the next few months.

All eyes are on Hormuz

Analysts said prices will remain high until traffic through the Strait of Hormuz is disrupted and beyond.

About 20% of the world’s oil and LNG passes through the strait.

“As long as oil flows through the Strait of Hormuz remain restricted, the path of least resistance for crude prices remains upward,” UBS analyst Giovanni Stanovo said.

International Energy Agency chief Fatih Birol warned in an interview with the Financial Times on Friday that it could take up to six months to restore oil and gas flows from the Middle East Gulf.

The Trump administration is considering plans to seize or blockade Iran’s Kharg Island to force Iran to reopen the Strait of Hormuz, Axios reported Friday, which could also pressure supplies.

On Thursday, Brent crossed $119 a barrel, near its March 9 peak, after Iran responded to an Israeli attack on a key gas field by knocking out 17% of Qatar’s LNG capacity. It will take up to five years to repair the damage.

Elsewhere, Russia attacked Ukrainian oil and gas facilities in the Poltava and Sumy regions overnight, Ukraine’s state oil and gas company Naftogaz said on Friday.

US energy companies increased their oil rig count by two this week to 414, the most since mid-December, energy services firm Baker Hughes said in its closely followed report on Friday.