Key Points:
- Brent crude and US oil prices jumped roughly 2% on Thursday.
- Gold prices reclaimed the $5,000 mark as investors sought safety.
- Negotiations in Geneva stalled over President Trump’s “red lines.”
- Traders fear conflict could close the vital Strait of Hormuz.
Oil prices surged to their highest level in nearly seven months on Thursday. Investors also rushed to buy safe assets like gold as political tension between the United States and Iran continues to heat up. Brent crude, the global standard, climbed almost 2% to reach $71.66 per barrel, while US crude rose to $66.43.
The uncertainty pushed gold back above the $5,000 mark, a level it reclaimed on Wednesday after a volatile few weeks. Meanwhile, the stock market struggled to find its footing. All three major US indexes finished lower on Thursday, with the Dow dropping 268 points as traders worried about how these geopolitical issues might hurt the economy.
The market reaction follows difficult negotiations in Geneva. US and Iranian officials met to discuss Iran’s nuclear program, but progress appears stalled. Vice President JD Vance stated on Tuesday that Iranian negotiators failed to acknowledge President Donald Trump’s “red lines.” At the same time, the United States has moved more military forces into the Middle East, increasing fears of a potential clash.
Investors are now watching the Strait of Hormuz closely. This narrow waterway is essential for the global economy, as about 20 million barrels of oil pass through it every day. That accounts for roughly 20% of the world’s total oil consumption. Iranian media recently reported that the country partially closed the strait for naval exercises, which immediately spooked traders.
Analysts warn that even a small disruption in this region could cause a massive supply shock. Ole Hansen from Saxo Bank noted that the market is adding a “risk premium” to prices because the world’s most important oil route is within striking distance of a conflict. If oil prices continue to skyrocket, economists fear it will drive up inflation worldwide and force central banks to keep interest rates high.
