WTI Surges 8.5% Amid Hormuz Crisis; US Treasury Weighs Futures Intervention

Crude oil markets witnessed an explosive rally on Thursday, with WTI surging 8.5% to settle near $81.00, marking its largest single-day percentage gain since 2020. The spike was driven by escalating geopolitical tensions in the Middle East, including reports of a US tanker being struck by a missile and Iranian claims regarding the closure of the strategic Hormuz Strait.

Supply Chain Shock

The unparalleled volatility stems from conflicting reports regarding the navigability of the Strait of Hormuz, a chokepoint for roughly 20% of the world's oil supply. While Iranian military officials claimed the strait is “under control” and effectively closed to hostile vessels, tracking data indicates commercial traffic has plummeted by over 95% as insurers pull coverage.

The supply disruption is already materializing in physical markets:

• WTI intraday highs breached $82.00.
• Brent Crude settled up nearly 5% at $85.41.
• US retail gasoline prices jumped 27 cents in a week.

Washington's Crisis Response

In a move that underscores the severity of the inflationary threat, White House officials revealed that the US Treasury is evaluating “unprecedented” options to stabilize prices. Beyond the traditional release of Strategic Petroleum Reserves (SPR), the Trump administration is reportedly considering direct intervention in oil futures markets—financial engineering aimed at crushing speculative premiums.

Despite the market turmoil, President Donald Trump downplayed the immediate price action, stating, “If it goes up, it goes up,” prioritizing the ongoing military campaign. However, the disconnect between the President's rhetoric and the Treasury's frantic contingency planning suggests deep concern over potential stagflationary headwinds facing the US economy.

Analyst View

Market participants warn that if the Hormuz blockade persists, oil could target the $95-$100 range rapidly. The resurgence of energy inflation complicates the Federal Reserve's path, with traders now pricing in a reduced probability (below 50%) of two rate cuts this year.