Oil prices reached their highest levels overnight since the Iran war began, with Brent crude topping $126 per barrel before pulling back on Thursday morning.

Why it matters: The jump will keep sending U.S. gasoline prices higher — and shows the market reacting to the possibility of a long stalemate that keeps the Strait of Hormuz throttled.

• Traders are also likely weighing potential military escalation.

The latest: The price of Brent crude dropped back to about $114 a barrel as of 8 a.m. Eastern. West Texas Intermediate, the U.S. benchmark, was at about $104 a barrel.

Zoom in: The average gasoline price was at $4.30 a gallon on Thursday morning, a jump of more than 7 cents from Wednesday and more than a dollar above the $3.18 average of a year ago, per AAA.

What they're saying: "The oil market has moved from over-optimism to the reality of the supply disruption we are seeing in the Persian Gulf," ING analysts Warren Patter and Ewa Manthey said in a note.

• The breakdown of U.S.-Iran talks and President Trump rejecting Iran's latest offer on Hormuz "has the market losing hope for any quick resumption in oil flows," they write.

The intrigue: Beyond the wide-angle reality — an historic disruption with no end in sight — today's expiration of the June Brent futures contract could be adding volatility. (Source: Axios)

Story Date: May 1, 2026