Oil breaks $100 a barrel as supply chaos outpaces diplomatic hopes
Brent crude jumped to its highest level since May, even as peace talks raised brief selling pressure.
Oil prices have broken through a psychological barrier that traders thought was behind them. Brent crude topped $100 a barrel for the first time since May, according to the New York Times, a level that seemed distant just weeks ago. The jump is not a fluke or a single-day spike; it reflects a market where supply shocks are winning the race against the possibility of renewed talks.
Diplomatic hopes briefly interrupted the rally. On Friday, oil fell about 3% after reports surfaced that Pakistan was pushing to restart U.S.-Iran talks with China's backing. The selling was real but fleeting. Even after that pullback, oil remained on track for a weekly gain of about 10%, underscoring how tightly supply fears grip the market.
Two forces explain the staying power of high prices. Physical oil prices neared $110 a barrel as the Iran and Ukraine wars continued hitting available supply, Reuters reported. Meanwhile, the Persian Gulf itself has become a war zone for merchants: more than 60 commercial ships have been attacked in the Persian Gulf, Strait of Hormuz and Gulf of Oman since March 1. These attacks are not abstract geopolitical theater; they block actual barrels from moving to global markets.
The deeper problem is one of time and probability. Prediction markets on Kalshi give less than 50% odds that the Strait of Hormuz fully reopens by July 2027, meaning traders are pricing in a scenario where disruptions persist for years. Oil is not elevated because a deal is impossible; it is elevated because the market believes disruption is more likely than restoration within any reasonable timeframe. Diplomatic windows exist, but they are no match for the physics of a blocked sea lane.
