North Sea oil hits record $147 as Strait of Hormuz remains blocked

A ceasefire agreement between Washington and Tehran has failed to halt the global energy crisis, driving North Sea oil prices to record levels.

A frantic scramble by European and Asian refiners to secure oil cargoes, coupled with a fresh wave of market anxiety over Iran’s continued pressure on the Strait of Hormuz, pushed North Sea prices to historic peaks on Thursday.

Forties Blend, a benchmark for immediate delivery crude, reached nearly $147 per barrel on Thursday according to LSEG data, surpassing the peaks seen on the eve of the 2008 financial crisis. Traders are struggling to source replacement cargoes for the massive volumes currently stranded in the Gulf.

Physical barrels from the North Sea were trading significantly higher than the $97 price of the international Brent benchmark for June delivery, a further signal of supply scarcity fears in the oil market.

The rush to secure cargoes was so intense that it disrupted a vital pillar of the oil market. Traders reported an inability to purchase Brent contracts for difference (CFDs) for next week after the price per barrel exceeded $30, breaching the threshold set by the Intercontinental Exchange (ICE). ICE is the primary exchange for European oil trading, and these contracts are widely used to hedge against price spikes. Multiple market participants noted they could not recall a time when Brent CFDs were untradable, adding that some transactions are now occurring over-the-counter. ICE did not respond to a request for comment.

The signs of escalating tension underscore how the global energy crisis is worsening, despite US President Donald Trump’s assertions that Tehran would soon reopen the strait. Regarding the waterway, which carried 20% of global oil supply before the conflict between the US, Israel, and Iran, Trump said Thursday: “You’re going to see oil start flowing very soon.” However, he also warned Tehran that it was doing a “very bad job” of allowing oil shipments through the strait and stated that it “should not be charging a fee” for safe passage.

Only a handful of vessels, most with Iranian affiliations, have transited the strait since a two-week ceasefire was declared on Tuesday. Goldman Sachs informed clients on Thursday that oil exports through the strait have plummeted in recent days, operating at just 8% of normal levels. Asia is particularly vulnerable to the disruption, as approximately 80% of its required oil and petroleum products transit this waterway.

Tehran has insisted that the agreement with the US allows it to maintain control over the strait, requiring vessels to obtain permission from the Islamic Revolutionary Guard Corps and pay fees. Hours after the agreement to halt hostilities was reached, Iran stopped the passage of oil tankers through the strait in response to Israeli strikes in Lebanon.

“If this continues for a few more days, we may see the market conclude that the straits are closed indefinitely, which could lead not just to a price spike but to a crisis in Asia,” said Amos Hochstein, energy advisor to former president Joe Biden. “This is not just about high prices. This is about a real physical shortage taking place,” he added.

In another sign of market tightening, Saudi Arabia said Thursday that its oil production capacity had dropped by 600,000 barrels per day (bpd) following recent attacks on energy infrastructure. The strikes damaged production capacity at the Khurais and Manifa fields, knocking out approximately 5% of the kingdom’s normal 12 million bpd capacity. The Ministry of Energy also announced that an attack this week on the East-West pipeline—a critical route for bypassing the Strait of Hormuz—caused a loss of approximately 700,000 bpd in transit volume.

Dennis Kissler, senior vice president of trading at BOK Financial, warned that the tight supply in the “physical market” would remain “until ships start moving through the Strait of Hormuz.” He added: “There will be selling in the futures market, but the physical market will remain tight because even when the strait opens, it will take 20 days to fix the logistical issues.”

Dated Brent, a benchmark tracked by pricing agency Platts that reflects the price of physical oil shipments traded in the North Sea (including Forties Blend), rose 7% to $131.96 on Thursday, recovering a portion of the previous day’s decline triggered by the ceasefire agreement.

Trading volume in the futures markets was calmer. Brent for June delivery rose 1% to $97.20 in New York trading, while the US benchmark West Texas Intermediate for May delivery rose 4.7% to $99.16.

Helima Croft, head of global commodity strategy at RBC Capital Markets, described futures market prices as a “lagging indicator for the physical market realities of Middle East waterways.”

Iranian Foreign Minister Abbas Araghchi told his Saudi counterpart, Prince Faisal bin Farhan, in a telephone call on Thursday that Iran has not yet begun direct talks with the US, despite the two-week ceasefire agreed upon this week.

Trump is sending a delegation led by Vice President JD Vance, Special Representative Steve Witkoff, and his son-in-law Jared Kushner to Islamabad this weekend for talks.