Oil Surges Past $123 on US Military Action Reports Against Iran

Global oil prices surged past $123 per barrel on Thursday following reports that the United States is actively considering military options to break a prolonged diplomatic deadlock with Iran, injecting acute geopolitical risk premium into energy markets and sending shockwaves across commodity, equity, and currency markets worldwide.

The reports, which emerged from US media citing officials familiar with internal deliberations, indicated that the Biden-era diplomatic framework has effectively stalled and that the Trump administration is now evaluating a range of kinetic options. The prospect of a military confrontation involving Iran — a major oil producer and a state with demonstrated capacity to disrupt shipping through the Strait of Hormuz — triggered an immediate and sharp repricing of crude oil futures.

Brent crude and West Texas Intermediate both registered multi-month highs, with market participants factoring in scenarios including supply disruption, Strait of Hormuz closure, and retaliatory action against regional energy infrastructure. Insurance premiums for tanker routes through the Persian Gulf rose sharply, adding to the cost shock rippling through global supply chains.

For Pakistan, the development carries severe implications. As a major oil importer already managing a fragile current account position and elevated energy sector debt, a sustained period of $120-plus oil prices would significantly worsen the trade deficit, pressure foreign exchange reserves, and potentially destabilise the ongoing IMF programme. The KSE-100's concurrent crash of 4,300 points reflected domestic market recognition of the depth of this external shock.