Wednesday looked like the worst might be over. Thursday reminded everyone it wasn't.
West Texas Intermediate crude — the U.S. benchmark — surged 8.5% to close at $81.01 per barrel Thursday, its biggest single-day gain since May 2020. International benchmark Brent crude settled nearly 5% higher at $85.41. That puts WTI up roughly 21% for the week.
The trigger: Iran launched a fresh wave of attacks, hitting an oil tanker with a missile and striking U.S. bases and regional allies. The moves shattered the fragile calm that had briefly settled over energy markets after Wednesday's Iran back-channel reports. Separately, Iraq — OPEC's second-largest producer — cut output by nearly 1.5 million barrels a day, telling Reuters it had no storage capacity and no export route.
America produces more oil than any country in history. It's still not enough to insulate consumers from what's happening in the Gulf.
CNN reported that the U.S. exports nearly a third of what it produces and imports nearly a third of what it consumes — because domestic crude is well-suited for gasoline but not for diesel, jet fuel, and other petroleum products. That dependency on global markets means prices at the pump follow global supply shocks, regardless of how much Texas is pumping.
AAA put the national average at $3.25 per gallon Thursday, up nearly 27 cents from last week. The last time gas prices moved this fast was March 2022, when Russia invaded Ukraine.
The Dow fell nearly 785 points Thursday. Airlines — whose fuel costs are now surging — got hit especially hard: American, United, and Delta each fell more than 5%. Retailers dropped too, on fears that higher gas prices will squeeze consumer spending.
Trump said Thursday that "further action to reduce pressure on oil is imminent," but markets have heard similar assurances before. Bloomberg reported Iran's Revolutionary Guard has pledged to intensify strikes in the coming days. Until there's a real off-ramp, every day the Strait of Hormuz stays choked is another day oil has room to run higher.