Oil prices rebounded sharply as fresh threats between the United States and Iran raised concerns that the nearly seven-month-old conflict could expand into a wider regional war, potentially putting more crude supplies and major shipping routes at risk.
Brent crude, the international benchmark, climbed as high as $106.24 a barrel on Thursday, gaining about 3% before easing slightly.
U.S. West Texas Intermediate crude also advanced, trading close to $94 a barrel. Brent later settled around $106.60, while U.S. crude settled at about $94.61.
The latest price increase came after diplomatic efforts at the United Nations General Assembly failed to produce clear evidence of an imminent agreement to end the conflict. Investors had previously pushed oil prices lower on hopes that Washington and Tehran could reach an understanding that would restore the flow of crude through the Strait of Hormuz.
The situation changed as both sides exchanged increasingly severe warnings.
U.S. President Donald Trump has threatened further military action against Iran if an agreement is not reached.
During his address to the United Nations, Trump warned that he could take extreme measures against Tehran while simultaneously indicating that a deal could still be possible.
Iran, meanwhile, has warned that any renewed American attack could lead to retaliation extending beyond the immediate battlefield.
Iranian officials have threatened to widen the conflict toward the Red Sea and potentially the Indian Ocean, increasing concerns about the security of international shipping and energy infrastructure.
The Strait of Hormuz has become a central point of the confrontation. The waterway normally carries a significant share of global oil supplies, making any prolonged disruption a major concern for energy-consuming nations.
Shipping through the strait has already slowed considerably, while a commercial vessel was struck in the waterway on Wednesday, with casualties reported. Iran has insisted that ships should obtain permission to pass, while Washington has demanded unrestricted passage through the strategic route.
The conflict has also spilled into the Red Sea, where Iran-aligned Houthi forces have intensified attacks against Saudi-linked targets and shipping interests. Reports of attacks involving Saudi energy infrastructure have added another layer of uncertainty for oil traders.
At the same time, diplomatic channels remain open. Iranian Foreign Minister Abbas Araghchi said Tehran had presented a seven-day proposal that could lead to the reopening of the Strait of Hormuz and the resumption of negotiations, provided certain conditions are met.
U.S. and Iranian negotiators have also been discussing a phased arrangement involving the reopening of the strait and the easing of the American blockade.
The competing signals have produced heightened volatility in energy markets. Traders are weighing the possibility of a diplomatic breakthrough against the risk of a broader conflict that could further restrict crude exports.
For oil-importing economies, sustained prices above $100 a barrel could increase transportation, electricity and manufacturing costs while adding pressure to inflation.
For major producers, however, higher prices could provide increased export revenues, although damaged infrastructure and disrupted shipping routes could limit their ability to benefit fully.
With negotiations continuing alongside military threats, the oil market is expected to remain highly sensitive to developments involving Iran, the United States, the Strait of Hormuz and the wider Middle East.
