Oil prices hit highest since 2022 after Trump reportedly to be briefed on new Iran plans | BBC News
Oil prices surged to their highest levels since 2022, with Brent crude briefly hitting $126 a barrel, amid reports that the US military was set to brief President Trump on new plans for potential strikes against Iran. The spike reflects fears of a prolonged closure of the Strait of Hormuz, now a central flashpoint in the ongoing US-Israel war with Iran on day 62. Iran's Supreme Leader issued a defiant statement claiming US defeat and hinting at a new legal framework for managing the Strait of Hormuz.
Summary
On day 62 of the US-Israel war with Iran, oil markets experienced dramatic volatility as Brent crude briefly surged nearly 7% to over $126 a barrel — the highest price since Russia's full-scale invasion of Ukraine in 2022 — before settling back to around $114. The spike was driven primarily by an Axios report that US Central Command (CENTCOM) was set to brief President Trump on new military options against Iran, including a potential wave of large-scale infrastructure strikes or a military takeover of part of the Strait of Hormuz to restore commercial shipping.
BBC business correspondent Ben King explained that analysts believe oil prices still do not fully reflect the risk of a prolonged Strait of Hormuz closure, meaning prices could climb even higher in a worst-case scenario. The Bank of England, which held interest rates steady on the same day, outlined three scenarios: two involving relatively swift resolution and falling energy prices, and a third in which oil remains above $100 per barrel through the end of next year — a scenario that would push UK inflation above 6% and force interest rates above 5%. The Bank also flagged the cascading impact on food prices, noting that fertilizers sourced from the Gulf region would become scarcer, disproportionately affecting lower-income households.
From Washington, BBC correspondent Shima Khalil reported that while CENTCOM had not confirmed the Axios story, the potential options being considered included large infrastructure strikes or physically securing part of the Strait — the latter requiring ground troops and raising questions about whether shipping companies would trust such a solution. She noted that the US naval blockade on Iranian ports, in place since April 13th, has been economically damaging to Iran but has not yet brought Tehran to the negotiating table. Meanwhile, Defense Secretary Pete Hegseth was facing a second day of congressional grilling over the effectiveness, duration, and cost of the operation — estimated at roughly $25 billion.
In Tehran, a written statement attributed to Supreme Leader Mojtaba Khamenei — notably still without any video or audio appearance, fueling speculation about his health — declared that the US had suffered a 'humiliating and shameful defeat' and called for the expulsion of American forces from the region. The statement also referenced a new 'legal framework' for the Strait of Hormuz, which Iranian authorities have previously linked to imposing tolls or taxes on ships passing through. BBC Persian correspondent Param Gabbadi explained that Iran has come to view the Strait as a far more valuable and monetizable strategic asset than its nuclear program, which served as leverage for decades.
Gabbadi also noted that the Iranian Revolutionary Guard Corps (IRGC) has threatened to escalate by using Houthi forces in Yemen to block the Bab-el-Mandeb Strait in the Red Sea, and by targeting oil infrastructure — refineries and oil fields — in Saudi Arabia and the UAE, potentially turning the conflict into a broader war of attrition.
Key Insights
- BBC analyst Ben King notes that oil market analysts believe current prices still do not fully price in the risk of a prolonged Strait of Hormuz closure, suggesting prices could rise even higher than the $126 peak if the conflict drags on.
- The Bank of England outlined a worst-case scenario in which oil stays above $100 per barrel through the end of next year, driving UK inflation above 6% and forcing interest rates above 5%, while also warning that fertilizer shortages from the Gulf could amplify food price shocks — an effect that surprised policymakers during the 2022 energy crisis.
- Shima Khalil reports that one of the military options reportedly being considered — a US military takeover of part of the Strait of Hormuz — would require boots on the ground, and it remains unclear whether shipping companies would have sufficient confidence in that option to resume commercial transit.
- BBC Persian correspondent Param Gabbadi argues that Iran has strategically reframed the Strait of Hormuz as a superior leverage point compared to its nuclear program, because unlike the nuclear issue, the Strait can be directly monetized through tolls — a crucial economic lifeline for a country devastated by decades of sanctions and the current war.
- Param Gabbadi warns that the IRGC has repeatedly threatened to escalate by directing Houthi forces to block the Bab-el-Mandeb Strait in the Red Sea and to strike oil refineries and fields in Saudi Arabia and the UAE, which would transform the current conflict into a much broader regional war of attrition.
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