If you were enjoying slightly cheaper gas for a hot minute, congratulations on that brief vacation from financial pain, because it is officially over. Oil prices rocketed upward on Thursday, hitting their loftiest levels in weeks as the Iran conflict decided to get even spicier, according to reports that have energy markets sweating bullets.
Brent crude, the global benchmark that dictates how much your wallet suffers, shot up over 6% and blew past $100 per barrel during early trading. That is the priciest it has been since late May. Meanwhile, West Texas Intermediate crude was not about to be left out of the party, surging more than 5% to land near $92 per barrel, its highest point since June 11.
So what lit this particular fire? Iran-backed Houthi rebels took credit for blasting two Saudi oil tankers cruising through the Red Sea. This happened just days after the Houthis announced a naval blockade aimed at Saudi Arabia, because apparently things were not tense enough already. The attacks suggest this conflict is now spilling beyond the Strait of Hormuz for the first time, which is roughly the geopolitical equivalent of the fire spreading to a second building.
Markets get especially nervous when anybody so much as sneezes near the Bab el-Mandeb strait, a chokepoint that handles millions of barrels of oil daily and carries somewhere between 12% and 15% of global maritime trade, worth over $1 trillion per year. Making matters worse, shipping through the Strait of Hormuz has basically flatlined, with vessel crossings reportedly dropping to single digits earlier in the week.
For those keeping score at home, oil has climbed roughly 35% since the start of the month and is now up over 60% year to date. Fun times.
Drivers are already getting walloped at the pump. The national average for regular gasoline ticked up to $4.09 on Thursday from $4.06 the previous day, per AAA. Remember that sweet relief from the U.S. and Iran memorandum of understanding back in mid-June? Yeah, that deal crumbled faster than a gas station pastry.
President Donald Trump warned on Wednesday that the U.S. would respond aggressively to any further strikes on commercial shipping, threatening to obliterate Iranian infrastructure. Hours later, the Houthis apparently said "cool story" and claimed they hit those two Saudi tankers anyway. The UK Maritime Trade Operations agency confirmed a tanker near Bab el-Mandeb was struck by an unknown projectile. Saudi state media reported the tanker Encelia caught fire overnight.
Deutsche Bank's Jim Reid summed things up by noting that inflation concerns are dominating market conversations, with Brent crude's surge front and center. Treasury yields climbed to 4.67% on the 10-year note, the highest since January 2025, and 30-year mortgage rates jumped to 6.77%, their peak since July 2025.
So basically, everything costs more and nothing is getting calmer. Welcome to Thursday.
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