Oil Surges Past $110 as Iran-US Stalemate Chokes Hormuz Traffic

Oil prices continued their upward march Friday as the fragile ceasefire between the United States and Iran showed few signs of producing a lasting resolution to the conflict that began in late February. Brent crude futures for July delivery rose 0.9 percent to trade near $111.34 a barrel while West Texas Intermediate held around $105. The June Brent contract had spiked to $126.41 before expiry Thursday the highest level since March 2022. That volatility reflects the market’s assessment of a prolonged disruption in one of the world’s most critical energy arteries.

The Strait of Hormuz remains effectively closed. Iranian forces continue to block passage while the U.S. Navy maintains its blockade of Iranian ports and crude exports. Roughly one fifth of global oil and liquefied natural gas supplies normally transit the strait. The resulting shortage has produced the largest oil supply disruption on record according to industry analysts. Prices have surged more than 57 percent since the U.S. and Israel launched strikes on February 28. Energy markets are once again demonstrating a basic economic reality: when supply is physically constrained prices rise to ration what remains and to signal producers and consumers to adjust behavior.

Major American oil companies felt the squeeze rather than the windfall some might have expected. Exxon Mobil reported a 45 percent drop in net income for the first quarter while Chevron’s earnings fell 36 percent from the same period last year. Both firms beat Wall Street estimates but offered sober assessments of the environment. Chevron chief executive Mike Wirth told CNBC the global energy system remains under extreme stress and warned that rising prices will persist until the strait reopens. Exxon absorbed nearly $4 billion in losses on hedging contracts described as a timing effect from the sudden supply shock. These results illustrate how physical blockades and policy uncertainty create costs that cannot be fully offset by higher headline prices.

The Trump administration meanwhile moved to address a separate legal constraint. Under the 1973 War Powers Resolution the president must withdraw forces within 60 days of notifying Congress of military action unless lawmakers authorize continued operations. With that deadline approaching the White House argued Friday that the Pakistan-brokered ceasefire agreed on April 7 and 8 had terminated active hostilities. An administration official told reporters that the absence of direct fire since early April means the clock has stopped. Defense Secretary Pete Hegseth made the same point during congressional testimony. Iranian Foreign Ministry spokesman Esmaeil Baghaei pushed back saying expectations of quick diplomatic breakthroughs were unrealistic regardless of the mediator. Tehran has threatened retaliation against U.S. assets in the Gulf if attacks resume.

The energy disruption is only the most visible part of a broader vulnerability. The Washington Examiner noted that the Hormuz closure has also halted shipments of sulfuric acid aluminum feedstock industrial chemicals and refined minerals. Gulf smelters have gone silent. Semiconductor plants in Taiwan and South Korea are scrambling for substitutes. China’s dominant role in processing copper gallium germanium and rare earth magnets adds another layer of risk. A single policy change in Beijing or further interruption in a chokepoint shipping lane can stall entire segments of advanced manufacturing.

This reality has drawn attention to an overlooked domestic resource. Landfills across the United States contain what some analysts now call an urban mine millions of tons of discarded electronics appliances and industrial waste rich in recoverable metals. Recovering these materials at scale could reduce dependence on foreign refining and vulnerable sea lanes. The concept has gained fresh interest as investors look for ways to harden supply chains. Amazon founder Jeff Bezos is reported to be raising $100 billion through Project Prometheus to acquire American manufacturers whose production depends on these inputs. The initiative pairs physical artificial intelligence with domestic factories an approach that assumes reliable access to copper palladium and rare earths. Those materials are currently refined largely in China and shipped through the same maritime routes now blocked.

United Arab Emirates presidential adviser Anwar Gargash captured the regional mood in a post on X stating that no unilateral Iranian arrangements regarding freedom of navigation through the strait can be trusted after what he called Tehran’s treacherous aggression against its neighbors. The comment underscores the deep skepticism among Gulf states about any short-term Iranian assurances.

Markets are performing their classic function: registering scarcity and forcing adaptation. Higher prices encourage conservation innovation in substitutes and investment in alternatives such as expanded domestic refining recycling technologies and non-Gulf energy sources. Yet the episode also highlights the costs of policies that allow critical supply chains to remain concentrated in unstable regions or adversarial hands. As talks drag on with no clear end to the Hormuz impasse businesses and consumers will continue bearing the burden of elevated energy and material costs. History suggests such constraints rarely resolve through declarations alone. They recede only when physical flows resume or when new supplies and processes emerge to render the old chokepoints less decisive. For now the price signals point to continued strain.