Investors are increasingly pricing in a long and economically damaging war as oil prices hover near $100 a barrel and no diplomatic resolution to the Middle East conflict appears forthcoming. Deutsche Bank market strategist Jim Reid said Thursday that markets are moving from hoping for a quick resolution to preparing for a protracted conflict with extensive economic consequences. The shift in investor psychology is keeping oil elevated and raising fears about a broad stagflationary shock.
Iranian forces struck merchant ships near the Strait of Hormuz, oil ports in Iraq, fuel tanks in Bahrain, and the port area adjacent to Oman’s Mina Al Fahal terminal Thursday. Three crew members aboard the Thai vessel Mayuree Naree were reported trapped. Iraq shut all crude exports and Oman cleared its main terminal of vessels. Bahrain placed residents under shelter-in-place orders.
Brent crude gained 9% to touch $100.29 before settling at $98, up about 6%. West Texas Intermediate climbed 8.6% to $94.75. Oil has risen from $60 at the year’s start to a peak of $119 this week. The Strait of Hormuz has been closed since February 28. Iran’s military warned of $200 oil.
The IEA released 400 million barrels of emergency crude from 32 member nations. The US contributed 172 million barrels from its Strategic Petroleum Reserve. President Trump pledged to continue military operations. Energy Secretary Wright accused Iran of deliberately threatening the energy security of the United States and allied nations.
Goldman Sachs raised its Q4 2026 Brent forecast to $71 per barrel from $66. Japan’s Nikkei fell 1.6%, South Korea’s Kospi lost 1.2%, and European gas gained 7.7%.