Oil prices have jumped to their highest since 2022 after a report that the US military is set to brief President Donald Trump on new plans for potential action in the Iran war.
US Central Command has prepared a plan for a wave of “short and powerful” strikes on Iran to try to break the deadlock in negotiations with Tehran, news site Axios reported. The BBC has contacted US Central Command and the White House for comment.
Brent crude rose by almost 7% to more than $126 (£94) a barrel at one point, the highest since Russia’s full-scale invasion of Ukraine.
Energy prices have risen this week as peace talks appear to have stalled, with the key Strait of Hormuz waterway still effectively closed.
After reaching $126.31 a barrel at one point in Asian trade, the price of Brent crude fell back to around $122 in early trade in Europe.
Crude oil is a key ingredient in petrol and diesel, and the jump in costs since the start of the Iran war has pushed up pump prices for motorists.
In the UK, petrol currently costs an average of 157p a litre, according to motoring group RAC, which is 24p higher than before the start of the war. Diesel is at nearly 189p a litre, up 46p compared with its pre-war price.
The Axios report cited anonymous sources, saying the proposed wave of strikes would be likely to include infrastructure targets.
Another plan focused on taking over part of the Strait of Hormuz so that it can be reopened for commercial shipping, Axios reported, adding that doing so could involve troops on the ground.
The current Brent futures contract for June delivery is due to expire on Thursday. The more active July contract was up by about 1.7% at around $112 a barrel.
Futures contracts are agreements to buy or sell an asset at a set date.
Oil traders have reacted quickly to the possibility of further military action in the Gulf, economics professor Yeow Hwee Chua from the Nanyang Technological University said.
Even a small chance of the conflict escalating could have “outsized implications” on global energy supplies, he added.
The US said it would blockade Iranian ports for as long as Tehran continues to threaten vessels that try to use the Strait of Hormuz, severely disrupting global energy shipments.
Iran retaliated against US-Israeli airstrikes by threatening to attack ships in the waterway, through which about a fifth of the world’s energy usually passes.
Oil prices had surged by 6% on Wednesday following reports that Washington was preparing for an “extended” blockade of Iran.
“It does seem as though escalation in the war is back on the table, be it in the guise of the US continuing its blockade in Iran, but also reports and rumours that in order to get out of this bind, Iran may start to strike again,” said Naveen Das, senior oil analyst at Kpler.
He told the BBC’s Today programme an oil price approaching $125 is the point where businesses and politicians “start to get a bit more jittery”.
“We might start seeing maybe more headlines of trying to de-escalate again,” he added, because the increase in prices “has a knock-on effect not only on oil, but oil-related products, inflation and basically every factor of our day-to-day lives”.
