Brent crude oil prices climbed sharply to around $123 a barrel on Thursday as worries over the Iran war and stalled U.S.-Iran talks fuelled concerns about global supply disruptions and the continued closure of the Strait of Hormuz.
Brent crude for June delivery rose 4.1% to $122.88 after briefly crossing $125 per barrel, while July contracts gained 2.5% to $113.17. U.S. crude also increased 2% to $109.05 a barrel. Before the conflict began in late February, Brent was trading near $70.
The war has blocked a clear path to peace, with continued U.S. restrictions on Iranian ports and the Strait of Hormuz remaining shut, keeping oil markets under pressure. New reports suggesting possible further escalation by U.S. President Donald Trump also weakened hopes for a quick resolution.
Analysts said the breakdown in talks has dampened expectations of a restart in oil flows.
“The breakdown of talks between the U.S. and Iran, along with President Trump reportedly rejecting Iran’s proposal for a reopening of the Strait of Hormuz, has the market losing hope for any quick resumption in oil flows,” ING Bank strategists Warren Patterson and Ewa Manthey said in a note.
Oil prices have also moved close to their highest levels since 2008, when Brent hit $147.50 a barrel during the global financial crisis.
In currency markets, the U.S. dollar strengthened further, reaching 160.61 Japanese yen, its highest level in nearly two years. It later closed at 160.44 yen. The euro slipped slightly to $1.1671.
The dollar has benefited from its safe-haven status during global uncertainty and from relatively high U.S. interest rates. The Federal Reserve’s decision to keep rates unchanged on Wednesday also supported the currency. Analysts said Japanese authorities could step in if the yen weakens further.
Global stock markets also declined. In Asia, Japan’s Nikkei 225 fell 1% to 59,284.92, South Korea’s Kospi dropped 1.4% to 6,598.87, and Hong Kong’s Hang Seng lost 1.1% to 25,816.80. Shanghai’s Composite index edged up 0.2% to 4,113.88.
Australia’s S&P/ASX 200 slipped 0.2%, while Taiwan’s Taiex and India’s Sensex each fell about 1%.
On Wall Street, U.S. futures and shares were mostly lower after a mixed session on Wednesday. The S&P 500 edged down less than 0.1%, the Dow Jones Industrial Average fell 0.6%, while the Nasdaq posted a slight gain.
Despite the broader weakness, some companies posted strong gains, with Starbucks rising 8.4% and Visa up 8.3% after better-than-expected earnings.