BANGKOK (AP) — The price of Brent crude oil, the global benchmark, exceeded $100 a barrel early Thursday, following a recent surge that brought it close to $120. The spike in oil prices—over 9% in a single day—was primarily driven by mounting supply concerns linked to Iranian attacks on commercial shipping routes in the Strait of Hormuz.

The U.S. benchmark crude oil also saw a significant rise, reaching approximately $94 per barrel. The escalation in tensions stems from Iran's intensified attacks, which aim to inflict enough global economic pain to pressure both the United States and Israel to cease hostilities in a conflict that began 12 days ago. Currently, there are no indications that the situation is easing.

Iran's military actions have notably targeted oil fields and refineries in Gulf Arab nations, effectively halting cargo traffic through the Strait of Hormuz, a crucial passageway for a fifth of all traded oil. In response to the turmoil, the International Energy Agency (IEA) announced on Wednesday it would release 400 million barrels from emergency reserves, marking the largest release in the agency's history to mitigate the war's impact on energy markets. Additionally, the United States plans to make available 172 million barrels from its Strategic Petroleum Reserve next week to combat soaring prices.

This announcement came on the heels of a meeting among energy ministers from the Group of Seven (G7) nations, including Canada, the United States, France, Italy, Japan, Germany, and Britain, convened in Paris to explore strategies to stabilize oil prices.

The ongoing conflict and uncertainty in the region have fueled speculation that oil prices may increase even further. Asian markets responded negatively to the news, with Japan's Nikkei 225 index falling 1.8% to close at 54,043.38. South Korea's Kospi declined by 1.2% to 5,540.56, and Hong Kong's Hang Seng Index also dropped 1.2% to 25,577.71. The Shanghai Composite Index fell by 0.6% to 4,106.96, while Australia's S&P/ASX 200 decreased by 1.7% to 8,599.00.

In the U.S., futures were down by 1%, with the dollar rising to 159.02 Japanese yen from 158.95. In European markets, the euro fell to $1.1538 from $1.1566. On Wednesday, U.S. stocks showed little change, with the S&P 500 marginally lower by 0.1% at 6,775.80. The Dow Jones Industrial Average dropped 0.6% to 47,417.27, while the Nasdaq composite rose slightly by 0.1% to 22,716.13.

Since the onset of the war, fluctuations in oil prices have led to volatile shifts in financial markets globally. At one point this week, oil prices surged to their highest levels since 2022, driven by fears that production in the Middle East could be disrupted for an extended period, exacerbating inflationary pressures on the global economy.

According to a recent report from Oxford Economics, the wild swings in Brent crude oil prices observed in recent days are noteworthy, with no clear timeline for de-escalation of the conflict or resumption of traffic through the Strait of Hormuz. The volatility in the markets suggests that, depending on future developments, oil prices could potentially escalate to as much as $140 per barrel.

Additionally, a report released on Wednesday indicated that U.S. consumers are facing a 2.4% increase in the prices of groceries, gasoline, and other living expenses compared to the previous year. Although this figure aligns with the previous month and is better than the expected 2.5%, it remains above the Federal Reserve's target inflation rate of 2% and does not account for the recent surge in gasoline prices linked to the ongoing war.

The prospect of high inflation combined with stagnant economic growth raises concerns of a worst-case scenario known as “stagflation,” a situation for which the Federal Reserve has limited solutions. Fears of stagflation are increasing not only due to soaring oil prices but also as a consequence of weakening hiring trends reported by U.S. employers.

As a reaction to the spike in oil prices, traders have adjusted their forecasts regarding when the Federal Reserve might resume interest rate cuts. President Donald Trump has vocally demanded such cuts, which would provide an economic boost but could inadvertently worsen inflationary trends.