WTI crude surged to $88 a barrel, a six-week high, as President Trump threatened to bomb facilities in or near Tehran if Iran attacks ships in the Strait of Hormuz, while Cushing crude inventories fell 674,000 barrels to near operational minimums, compounding supply risks that Goldman Sachs warned could push Brent above $120.
WTI crude surged to $88 a barrel, a six-week high, as President Trump threatened to bomb facilities in or near Tehran if Iran attacks ships in the Strait of Hormuz, while Cushing crude inventories fell 674,000 barrels to near operational minimums, compounding supply risks that Goldman Sachs warned could push Brent above $120.
President Trump said Wednesday on Truth Social that any Iranian attack on vessels in the Strait of Hormuz would trigger US strikes on "a bridge or power plant, including facilities located in or near Tehran." The threat marked a geographic escalation from previous warnings focused on coastal military targets. Secretary of State Marco Rubio confirmed the US would continue attacks "as long as Iran tries to control shipping traffic," while Defense Secretary Pete Hegseth signaled potential expansion to include Yemen's Houthi rebels, who on Monday announced a maritime blockade against Saudi Arabia in the Bab el-Mandeb strait.
"This is a dangerous precedent — if a nation state can control an international waterway, charge a toll and blow up ships that don't pay, it will repeat in other regions," Rubio said at an ASEAN meeting in Manila, warning the principle could extend to Asian waterways.
The geopolitical escalation converged with tightening physical supply. Cushing, Oklahoma — the delivery point for WTI futures — saw inventories drop 674,000 barrels last week, pushing storage levels toward the operational minimum that typically triggers price spikes in the front-month contract. US crude production also slipped from its record high, even as the rig count continued rising, while the Strategic Petroleum Reserve accelerated releases. Overall commercial crude inventories rose 2.01 million barrels, above the 500,000-barrel draw the market expected, but traders focused on the Cushing bottleneck rather than the headline number.
The $4 Gasoline Threshold
US retail gasoline prices returned to an average of $4 a gallon, a level that historically pressures consumer spending and erodes approval ratings. The national average stood at $3.14 a year ago. Brent crude rose 3.2% to $90.95 a barrel Monday, while benchmark US crude climbed 2.8% to $84.04, before extending gains through midweek. Goldman Sachs warned that if the Strait of Hormuz crisis persists, Brent could break above $120, a scenario that would push gasoline prices well beyond the current threshold.
Two Chokepoints Under Threat
The Strait of Hormuz — through which one-fifth of the world's oil and liquefied natural gas once passed — remains effectively closed after Iran blockaded the waterway and attacked tankers using a southern route hugging Oman's coast. Iran's Revolutionary Guard said Tuesday it stopped two "non-compliant oil tankers" attempting to transit the strait. At least five vessels, including crude tankers carrying Saudi oil, made u-turns before reaching the Bab el-Mandeb strait after the Houthis threatened to block Saudi-linked ships. The Saudi military has vowed to keep the Bab el-Mandeb open, but the simultaneous threat to both chokepoints leaves global energy supply chains exposed to disruption on two fronts.
The US completed an 11th consecutive night of strikes on Iran on Tuesday, targeting aircraft hangars, drone storage and operations centers. Trump also threatened to strike the Pickaxe Mountain nuclear facility "pretty soon, and very heavily," though he acknowledged some Iranian ballistic missiles have survived US bombing campaigns because they are buried underground. The war has cost about $37.5 billion so far, Hegseth told lawmakers, with sources saying the actual figure could be far higher once military construction and base repairs are included.
This article is for informational purposes only and does not constitute investment advice.
