Where to for the oil price as it surges to highest level in over a year?
Brent crude has climbed above $85 per barrel as escalating Middle East tensions and Strait of Hormuz concerns raise fears of major energy supply disruptions.
Oil prices surge to highest levels in over a year on Middle East tensions
Global crude oil prices have surged sharply over the past week, reaching their highest levels in more than a year as escalating geopolitical tensions in the Middle East raise fears of major disruptions to global energy supplies.
Brent crude oil, the international benchmark, has climbed to $84 per barrel, marking its highest level since mid-2024 and extending a rapid rally that has unfolded over several trading sessions.
Strait of Hormuz concerns drive rally
The surge has been driven primarily by concerns about the security of the Strait of Hormuz, a narrow shipping route between Iran and the Gulf states through which roughly 20 percent of the world’s oil supply passes. Reports of attacks on vessels, threats to close the waterway and broader regional conflict have prompted shipping disruptions and increased insurance costs for tankers, raising the risk of supply constraints in global energy markets.
Rapid price gains reflect risk premium
Oil prices have reacted quickly to the geopolitical risk premium. In some trading sessions this week Brent crude rose 7 - 9 percent in a single day, while US benchmark West Texas Intermediate (WTI) also posted sharp gains as traders priced in the possibility that exports from the Middle East could be curtailed.
The rally builds on an already volatile market: crude prices had been climbing earlier in the year amid tensions between the United States and Iran and concerns about supply outages. Since early January a 36% oil price rise has so far been seen.
Shipping disruptions tighten supply chains
Another factor supporting prices is uncertainty around shipping and logistics. Tanker traffic through the Gulf has slowed as operators reassess safety risks, with several companies temporarily halting transit through Hormuz. Even without a formal closure of the strait, these disruptions can tighten global supply chains and amplify price movements because the route is critical for oil shipments from Saudi Arabia, Iraq, the UAE and other producers.
Prices remain below extreme levels
Despite the sharp rally, analysts note that oil has not yet approached the extreme levels seen during earlier geopolitical crises. Brent crude remains below the $100 per barrel threshold that markets often view as a key psychological level, partly because global supply has diversified in recent years with growing production from the United States, Brazil and Guyana.
Forward outlook depends on escalation
Looking ahead, the direction of oil prices will largely depend on whether tensions in the region escalate or stabilise. If shipping through the Strait of Hormuz is further disrupted or major oil infrastructure is affected, prices could climb significantly higher. Conversely, diplomatic progress or additional supply from OPEC+ producers could ease market fears and limit further gains.
Markets will monitor developments closely adjusting positions as new information emerges.
Worst-case scenarios involve sustained Hormuz closure or attacks on major production facilities. Such events could drive oil towards or above $100 per barrel.
Base-case assumptions incorporate continued reduced but functioning Hormuz traffic. This scenario supports current elevated price levels.
Inflationary implications of oil surge
For now, the rapid rise in crude prices is reverberating across global financial markets and raising concerns about renewed inflationary pressure, as higher energy costs filter through to fuel prices, transportation and broader consumer goods.
Inflation sensitivity to energy costs varies by economy. Countries importing substantial oil face greater exposure than producers.
Central banks monitor oil-driven inflation carefully. Sustained energy price increases complicate monetary policy decisions whereby interest rate expectations may shift if oil prices remain elevated.
Whereas persistent inflation reduces scope for rate cuts, so does a potential spike in inflation, driven by higher input costs such as oil. In the UK, for example, analysts no longer expect the Bank of England (BoE) to cut rates in March.
Impact on different sectors
Oil price surges create winners and losers across economic sectors. Energy companies benefit from higher revenues and improved profitability.
Integrated oil majors including Shell, BP and ExxonMobil see upstream earnings increase. Refining margins also typically improve during supply disruptions.
Airlines and transportation companies face margin pressure from higher fuel costs, though, and are particularly exposed to oil price movements.
Chemical manufacturers using petroleum feedstocks experience input cost increases and margins compress unless pricing power allows pass-through.
Historical context for current levels
Oil prices have experienced substantial volatility over recent years providing context for current levels. The pandemic saw unprecedented collapse to negative prices.
Recovery through 2021 - 2022 drove oil above $120 per barrel as the Russian invasion of Ukraine created supply concerns.
The subsequent decline through 2023 and 2024 reflected recession fears and demand concerns with prices stabilising in the $70 - 90 range.
Brent crude monthly candlestick chart
Between April and December 2025, the Brent crude price slid several times to the $60 region on ample supply but at the beginning of this year rallied sharply amid short-covering and heightened geo-political tensions.
Current levels around $80 - 84 represent upper end of trading ranges going back to August 2024. Further gains would break above established resistance and may lead to the September 2023 to April 2024 peaks at $91.54 to $95.10 being reached.
Brent crude weekly candlestick chart
How to trade oil markets
Investors and traders interested in oil exposure have several options during volatile periods. Here's how to approach oil market participation:
- Research current geopolitical developments, supply-demand fundamentals and historical price patterns thoroughly.
- Understanding energy markets and geopolitics helps inform positioning. Trading for beginners provides useful background.
- Choose whether you want to trade or invest in oil-related assets. Spread betting and CFD trading allow speculation on price movements.
- Open an account with a broker offering commodity trading including crude oil futures and energy sector equities, even on weekends.
- Search for oil markets on your chosen trading platform. Consider both direct commodity exposure and energy company shares.
- Place your trades based on analysis and risk tolerance. Use stop-loss orders to manage downside risk, particularly when markets are volatile and geopolitical events create price gaps.
Remember that oil markets can be extremely volatile during geopolitical crises. Only trade with capital you can afford to lose, and maintain appropriate position sizing reflecting elevated uncertainty during periods of Middle East tension.
Important to know
This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
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