Oil Surges Above $126 Amid Iran War, Raising Inflation and Global Economic Risks

The longer the disruption to Middle East fuel supplies lasts, the risk grows that higher energy costs will feed into broader inflation that could dent economic growth.

o Brent crude crossed $126/barrel, the highest level since the Iran war began.

o Prices have risen ~30% in two weeks due to supply disruption fears.

2. Geopolitical Tensions Intensify

o Donald Trump confirmed continuation of a naval blockade on Iran.

o Uncertainty persists around the Strait of Hormuz, a critical global energy route.

3. Supply Disruption Concerns

o Markets fear prolonged disruption of Middle East oil and gas supplies.

o Escalation risks are driving volatility in global energy markets.

4. Inflation Pressures Rising

o Higher oil prices are pushing up fuel, transport, and service costs.

o Economist Bernard Yaros warns: inflation will worsen before improving.

5. Federal Reserve’s Cautious Stance

o Jerome H. Powell emphasized uncertainty and need for caution in monetary policy.

o High energy prices may delay or complicate rate cuts.

6. Global Impact Warning

o World Bank estimates 24% rise in energy prices this year.

o Chief economist Indermit Gill warns of cascading effects:

§ Higher energy → higher food prices → higher inflation → higher interest rates.

7. Sharp Rise in U.S. Fuel Prices

o Gasoline: $4.30/gallon (up 44% since war began).

o Diesel: $5.50/gallon (up 46%).

o Fuel price increases lag crude but are catching up quickly.

8. Stock Markets Show Mixed Response

o S&P 500 remains broadly flat despite energy turmoil.

o Tech giants (Alphabet, Amazon, Microsoft, Meta) support markets with strong earnings and AI investments.

o European and Asian markets declined slightly due to energy import concerns.

Core Insight

The Iran war is triggering a classic energy-driven inflation shock, with rising oil prices feeding into global inflation, complicating central bank policy, and increasing risks to economic growth worldwide.

[ABS News Service/30.04.2026]

Oil prices continued to surge on Thursday (30.04.2026), hitting a fresh wartime high above $126 a barrel on concerns that the war in Iran could escalate, leading to a longer disruption of fuel supplies from the Middle East.

President Trump maintained his stance that the naval blockade of Iran’s ports would persist until Tehran gives up its nuclear program. His remarks to Axios on Wednesday suggested that the standoff over the Strait of Hormuz, the vital trading route for oil and natural gas supplies, was not nearing a resolution.

After the Federal Reserve held interest rates steady on Wednesday, Jerome H. Powell acknowledged that the war had led to significant uncertainty and policymakers needed to be “very cautious” about their next steps.

“We’re very well aware that people are experiencing higher gas prices all over the country now,” Mr. Powell said. “And that hurts.” He added that if energy costs remained high, the effects could filter through to airfares and other products and services dependent on oil. “People are going to start to feel that,” he said.

The average price of regular gasoline in the United States has followed oil higher, hitting $4.30 a gallon on Thursday, up 27 cents in a week, according to data from the AAA motor club.

Higher energy prices and the lingering effects of Mr. Trump’s tariffs are expected to keep inflation elevated through the rest of the year, Bernard Yaros, the lead U.S. economist at Oxford Economics, wrote in a note. “Inflation will get worse before it improves,” he added.

The World Bank estimated that the war in Iran would push energy prices up 24 percent this year, according to a broad index covering oil, gas and coal. “The war is hitting the global economy in cumulative waves: first through higher energy prices, then higher food prices and finally, higher inflation, which will push up interest rates and make debt even more expensive,” Indermit Gill, the World Bank’s chief economist, said this week.

Over the past two weeks, the price of Brent crude, the global benchmark for oil, has risen about 30 percent. The price of Brent for June delivery, a soon-to-expire contract that investors trade based on their expectations for where prices are headed in the near future, jumped on Thursday to $126 a barrel, before pulling back to around $122 a barrel, a gain of nearly 3 percent on the day.

West Texas Intermediate crude, the U.S. benchmark, was around $109 a barrel, up about 2 percent.

Gasoline prices hit a fresh wartime high.

· U.S. gasoline jumped to the highest point since the start of the war in Iran, according to AAA, an increase that has raised the cost for drivers 44 percent since the first U.S.-Israeli strikes.

· Diesel prices stood at $5.50 on Thursday, up 46 percent since the start of the war.

· Gas prices don’t move in lock step with crude, usually trailing increases or drops by a few days.

Stocks are mixed as investors weigh energy disruptions against earnings growth.

· Futures on the S&P 500 pointed to little change when stocks resume trading in the United States on Thursday. The benchmark index is roughly flat for the week, a sharp contrast to the turmoil in energy markets.

· U.S. stocks have been heavily influenced by the biggest technology companies, which have reported bumper profits and extensive plans to develop artificial intelligence systems. On Wednesday, Alphabet, Amazon, Microsoft and Meta said they spent a collective $130 billion on data centers. Their share prices were mixed in premarket trading.

· Stocks in Europe fell slightly, with the Stoxx 600, a broad index that tracks the region’s largest companies, down 0.3 percent.

· Stocks in Asia, where countries import vast quantities of oil and gas, mostly traded lower. Japan’s Nikkei 225 and Hong Kong’s Hang Seng each fell about 1 percent.