US oil rises 5% to session high above $78/bbl

US oil rises 5% to session high above $78/bbl

Oil prices in the United States surged nearly 5% on March 4, 2026, reaching a session high above $78 per barrel as escalating tensions between the U.S., Israel, and Iran intensified concerns over Middle East supply disruptions. U.S. West Texas Intermediate (WTI) crude climbed to $71.97 per barrel, while Brent crude futures settled at $78.83, reflecting heightened fears of prolonged conflict and potential closures of the Strait of Hormuz, a critical global oil transit route. Iranian officials warned that the strait is effectively closed, with threats to target energy infrastructure and tankers, prompting insurers to withdraw coverage for vessels navigating the region.

The conflict has already disrupted refining operations, including Saudi Arabia's largest domestic refinery, which shut down following a drone strike. Analysts note that extended hostilities could push Brent prices to $120–$150 per barrel, with Bernstein revising its 2026 price forecast to $80 from $65. Refined product markets also reacted sharply: U.S. ultra-low-sulfur diesel futures hit a two-year high, while European gasoil prices surged 18% in a single session.

Financial markets mirrored the volatility, with U.S. stocks declining as investors worried about inflationary pressures from higher energy costs and potential Federal Reserve rate hikes. The S&P 500 fell 0.5% on March 4, with oil prices rising 3.5% to a 14-month peak. Analysts caution that prolonged conflict could strain global economic growth and delay monetary policy easing.

The situation remains fluid, with markets closely monitoring developments in the Middle East and their cascading effects on energy security and financial stability.