US crude futures hit $84.35/bbl on Mideast conflict, highest since July 2024

US crude futures hit $84.35/bbl on Mideast conflict, highest since July 2024

Oil prices surged to multi-year highs amid escalating geopolitical tensions in the Middle East, with U.S. crude futures hitting $76.93 per barrel on March 4, a gain of 8% driven by fears of prolonged supply disruptions. The international benchmark, Brent crude, climbed to $84.24, its highest level since July 2024, as the U.S.-Israel military campaign against Iran expanded and Iran retaliated by threatening to block the Strait of Hormuz. The critical shipping chokepoint, through which 20% of global oil and liquefied natural gas transit daily, saw traffic effectively halted as insurers canceled coverage for vessels and shippers avoided the region.

Iran's Revolutionary Guard declared the strait "closed," vowing to attack any ship attempting to pass, while strikes on energy infrastructure in Gulf countries and tankers further exacerbated market anxieties. Analysts warned that sustained disruptions could push prices toward $100 or even $120 per barrel if normal shipping resumes not within weeks. OPEC+ increased production quotas by 220,000 barrels per day in a bid to stabilize markets, but experts noted most member states' exports rely on the Strait of Hormuz, which remains effectively shut.

Refined product prices also spiked, with U.S. diesel futures rising to a two-year high as regional refineries, including Saudi Arabia's largest facility, suspended operations following drone strikes. Global insurers are imposing stricter coverage terms, including voyage approvals and routing restrictions, compounding costs for shippers. U.S. President Donald Trump indicated the conflict could extend beyond initial projections of four to five weeks, adding uncertainty to near-term market dynamics.