US Crude Oil Surpasses $100 Mark Amid Middle East Conflict

US oil prices closed above $100 per barrel on Monday for the first time since the US and Israel initiated military action against Iran, as former President Donald Trump threatened further escalation, including strikes on critical energy infrastructure.

West Texas Intermediate futures climbed over 3%, settling just under $103 per barrel—the highest level since July 2022. The $100 price point represents a significant psychological threshold closely monitored by traders and market participants. Meanwhile, the global benchmark Brent crude is poised for a record monthly gain in March, while average US retail gasoline prices remain near $4 per gallon.

The ongoing Middle East conflict has disrupted global markets and raised concerns about rising inflation coupled with slowing economic growth. The vital Strait of Hormuz remains largely closed to vessel traffic, severely hampering energy shipments. Uncertainty persists—any significant damage to Persian Gulf energy infrastructure could drive oil prices even higher, increasing costs for consumers and businesses.

“The $100 level serves as a symbolic marker not only for energy markets but also for cross-asset investors,” said Frank Monkam, head of macro trading at Buffalo Bayou Commodities. He noted that investors would interpret the breach as increasing risks related to inflation, growth, and policy volatility.

Fuel prices are already rising sharply. As of Sunday, the average US retail gasoline price stood at $3.99 per gallon, according to the American Automobile Association. Should prices exceed $4 per gallon, it would mark the first time since 2022 that this psychological barrier has been breached, adding pressure on Republicans ahead of November's midterm elections, which are expected to focus heavily on cost-of-living concerns.

In a social media post, Trump warned that if a deal with Iran is not reached soon and the Strait of Hormuz is not reopened, the US would respond by destroying Iran's electric plants, oil wells, and Kharg Island.

The latest US threats signal further escalation as the conflict enters its fifth week, casting doubt on future production prospects despite recent diplomatic efforts by Washington and separate peace talks held over the weekend in Pakistan.

Iran’s oil exports rely almost entirely on Kharg Island, a small facility in the Persian Gulf that serves as the loading point for approximately 90% of the country’s crude shipments.

According to Claudio Galimberti, chief economist at Rystad Energy, WTI closing above $100 clearly indicates that the situation is escalating rather than de-escalating. However, he added that both Iran and the US have incentives to reach a ceasefire and that a relatively quick resolution should not be ruled out.

Oil prices also found support on Monday as additional US troops arrived in the region and Iran-backed Houthi militants in Yemen entered the conflict. Traders warn that energy prices could rise further if the war continues.

In a Monday interview, Treasury Secretary Scott Bessent stated that the US intends to regain control of the Strait of Hormuz over time, ensuring freedom of navigation either through US-led escorts or a multinational coalition.

Despite these assurances, traders remain skeptical. Darrell Fletcher, managing director of commodities at Bannockburn Capital Markets, commented that the administration’s attempts to talk down the market are losing credibility.

Under normal conditions, the Strait of Hormuz facilitates about one-fifth of global oil flows. Tehran has moved to formalize its control of the waterway, blocking most vessels while permitting limited passage for ships from countries such as Pakistan, Thailand, and Malaysia. In a symbolic gesture, two Chinese state-owned container ships attempted to exit the strait on Monday.

Fletcher also noted that light holiday trading on Monday made the market more susceptible to exaggerated price swings.

Brent futures experienced volatility amid thin liquidity, as traders increasingly stayed on the sidelines to avoid sharp, headline-driven fluctuations. The front-month May contract swung as investors closed positions ahead of its Tuesday expiration, settling near $113 per barrel.

Financial institutions are racing to assess how the conflict—and oil prices—may evolve. Macquarie Group Ltd. suggested last week that under a scenario with a 40% probability—where the conflict persists through June and the Strait of Hormuz remains closed—futures could reach $200 per barrel.