Oil tops $105 as Trump rules out Iran deal

Global oil prices soared past $105 per barrel on Thursday as escalating hostilities between the United States and Iran, combined with President Donald Trump's declaration that he is not seeking a deal with Tehran, rattled energy markets and sent shockwaves through the global economy.

Brent crude, the international benchmark, rose nearly 6% to more than $107 per barrel, while West Texas Intermediate climbed about 6% to near $102, according to UPI — levels not seen since May. The surge followed Trump's remarks to reporters on Wednesday that he did not anticipate oil prices retreating until "right after" the midterm elections in November. "Right after the election, oil prices are going to be tumbling downward," Trump said. "They're going to be tumbling down, and we'll get them down."upi+2

The conflict has effectively closed the Strait of Hormuz, a shipping lane that previously carried about 20% of the world's petroleum, choking the flow of oil and gas to international markets. Fighting erupted again this month after a period of relative calm in August, with Iran attempting to attack American warships and the U.S. military destroying at least eight Iranian tankers since Saturday. Iran's Houthi allies in Yemen attacked energy facilities in Saudi Arabia this week, injuring more than 70 civilians.cnbc+2

Economic Fallout Spreads

The European Central Bank on Thursday raised its three key interest rates by 25 basis points, citing sustained inflation pressure from the conflict. The deposit facility rate will rise to 2.50%, effective September 16. August data showed euro zone headline inflation reached 3.3%, with energy prices running at 14.3%. The ECB projected headline inflation averaging 3.0% for 2026.qz

In the United States, gasoline prices hit a record high for Labor Day on Monday, according to AAA, and diesel reached $5.98 per gallon. The national average for regular gas climbed to $4.28 per gallon, up 14 cents in a single week. The Bureau of Labor Statistics reported Thursday that producer prices accelerated in August, driven largely by the conflict.clickorlando+2

Bond yields also climbed. In the United Kingdom, 10-year gilt yields reached their highest point since 2007, while Germany's 10-year Bund yield hit 3.451%, a level last seen in 2011.bbc+1

Warnings of Worse to Come

Goldman Sachs's The Goldman Sachs Group, Inc. ↘ 0.36% Daan Struyven warned on CNBC that an escalating war could push oil prices above $120 per barrel. S&P Global ↘ 0.98% said Thursday it does not expect Middle East oil output to return to pre-war levels by the end of 2027.cnbc+1

Meanwhile, the International Energy Agency announced Thursday that global coal consumption is set to hit a record high this year, forecasting a 1.2% rise as nations struggling to secure oil and gas turn to coal for electricity. The Wall Street Journal News Corp ↘ 0.03% reported late Wednesday that White House advisors have told Trump the war could last beyond the end of his term in January 2029 — contradicting months of assurances that the conflict was drawing to a close.upi+2

Harvard economics professor Ken Rogoff captured the prevailing mood on Wall Street: "The Iran war is unsettled and it's unsettling Wall Street because it doesn't seem to be ending."clickorlando