Oil prices experienced a sharp surge on Wednesday, climbing more than 7% as escalating geopolitical tensions between the United States and Iran raised serious concerns about global supply disruptions. International benchmark Brent crude settled at $119.06 per barrel, while US West Texas Intermediate (WTI) crude closed at $107.23 per barrel.
The rally was triggered by comments from former President Donald Trump, who vowed to maintain a naval blockade of Iran until a nuclear agreement is reached. "The blockade is somewhat more effective than the bombing," Trump told Axios. "They are choking like a stuffed pig, and it is going to be worse for them. They can't have a nuclear weapon."
The standoff has intensified pressure on global energy markets, particularly due to the strategic importance of the Strait of Hormuz. Iran has refused to reopen the strait until the US lifts its blockade, effectively choking off a key artery through which roughly 20% of the world's oil typically passes. Efforts to restart negotiations have stalled, with Iran's UN ambassador, Saeed Iravani, urging the Security Council to condemn what he described as unlawful interference by the US.
Compounding the crisis, the Organization of the Petroleum Exporting Countries is grappling with the unexpected departure of the United Arab Emirates, one of its largest producers. Strategists at ING described the UAE's exit as "a big blow" to OPEC, noting it could weaken the cartel's influence. However, analysts at RBC Capital Markets suggest the move may point to a broader strategic realignment rather than an immediate supply shock.
Adam Turnquist, chief technical strategist for LPL Financial, warned that markets may be underestimating a potential supply crunch. "While crude oil futures have dropped off their March highs, the physical supply squeeze for oil may be somewhat underappreciated by investors," he said.
The geopolitical turmoil also spilled over into cryptocurrency markets, with XRP trading at $1.36, down 1% in 24 hours, as investors monitored wider risk conditions. According to CoinMarketCap, XRP's market cap stood at $83.96 billion, with trading volume rising to $1.95 billion. The token stayed below the $1.40 mark as energy-driven risk aversion weighed on digital assets.
