Oil prices climbed sharply on Friday, erasing earlier losses as investors weighed the widening economic fallout from the escalating U.S.–Iran war and the growing threat to global energy supplies moving through the Strait of Hormuz.

By early morning in New York, global benchmark Brent crude had risen 2.2% to $87.27 per barrel, marking a fresh 52-week high, while U.S. West Texas Intermediate crude advanced 3.8% to $84.08. The rally places oil on track for its biggest weekly gain since Russia’s full-scale invasion of Ukraine in 2022, underscoring how quickly geopolitical tensions are spilling into global commodity markets.

The surge in prices results from mounting concern that the conflict between the United States, Israel, and Iran — now in its seventh day — could escalate into a prolonged disruption of Middle Eastern energy exports. Iran’s retaliatory strikes across the Gulf region have already shaken shipping routes and energy infrastructure, while traffic through the Strait of Hormuz has slowed dramatically.

The narrow waterway, which connects the Persian Gulf with the Gulf of Oman, carries roughly one-fifth of the world’s oil and gas supply under normal conditions. Any sustained disruption to that flow would immediately tighten global supply and ripple through everything from gasoline prices to manufacturing costs.

Energy officials are now openly warning of a severe price shock if shipping through the strait is halted entirely. Qatar’s energy minister, Saad al-Kaabi, told the Financial Times that crude prices could surge to $150 per barrel within weeks if tankers are unable to pass through the corridor — a scenario that analysts say would push the global economy into a fresh inflationary shock.

“Everybody that has not called for force majeure we expect will do so in the next few days if this continues. All exporters in the Gulf region will have to call force majeure,” he said.

“This will bring down the economies of the world. If this war continues for a few weeks, GDP growth around the world will be impacted. Everybody’s energy price is going to go higher. There will be shortages of some products and there will be a chain reaction of factories that cannot supply.”

Such fears intensified after reports suggested that the strait is effectively shut down to commercial traffic as container shipping companies and tanker operators suspend operations due to security concerns.

“We don’t yet know the extent of the damage, as it is currently still being assessed. It is not clear yet how long it will take to repair,” Saad al-Kaabi said.

The latest spike in oil prices briefly paused overnight after Washington granted India, the world’s third-largest oil importer, a temporary 30-day waiver allowing it to resume purchases of Russian crude. The U.S. had earlier imposed a 25% penalty tariff on India for buying Russian oil but withdrew the measure last month in a move widely interpreted as an attempt to ease global supply pressures.

Markets also reacted to reports that the U.S. Treasury is preparing emergency measures aimed at curbing energy price spikes, including potential interventions in the oil futures market.

Even so, the broader trajectory for oil remains sharply upward as the war spreads across the Middle East and threatens a region that produces nearly a third of the world’s crude.

The economic consequences are already being felt. In the United States, the average price of a gallon of regular gasoline jumped nearly 27 cents in just one week to $3.25, according to data from the American Automobile Association. The rapid increase is fueling fears that higher fuel costs could feed into inflation at a time when central banks are still grappling with the aftermath of pandemic-era price surges and recent tariff pressures.

Yet some economists argue the inflationary effect may be more complex.

Atakan Bakiskan, chief U.S. economist at Berenberg, said higher energy prices could paradoxically dampen broader inflation by squeezing consumer spending.

“Contrary to what consensus thinks, I think higher energy prices could actually be deflationary for the U.S.,” Bakiskan said in an interview with CNBC. “Obviously the higher energy price is going to push up headline CPI inflation mechanically. But when you think about it, it also reduces consumer purchasing power.”

Consumers forced to pay more for gasoline typically cut back spending elsewhere, which can slow demand for other goods and services and weigh on core inflation, he added. Still, financial markets remain deeply unsettled by the possibility that the conflict could spread further across the region and drag on for weeks.

U.S. Defense Secretary Pete Hegseth indicated that Washington is preparing for a prolonged campaign against Iran.

“There’s no shortage of American will here,” Hegseth told reporters on Thursday. “If you think you’ve seen something, just wait.”

He added that additional U.S. combat power is continuing to flow into the region.

Maersk Suspends ME-bound Services

The widening conflict has already begun disrupting global supply chains. Danish shipping giant Maersk said it has temporarily suspended two major container services linking the Middle East with Asia and Europe as the security situation deteriorates.

The company halted its FM1 service connecting the Far East to the Middle East and its ME11 route linking the Middle East with Europe. Shuttle services within the Persian Gulf have also been suspended indefinitely. Maersk’s ME1 route between the Middle East and northern Europe will also temporarily skip Jebel Ali — one of the region’s largest ports — as vessels are rerouted to India and Oman.

Container shipping companies across the industry have begun diverting vessels around the southern tip of Africa to avoid the Persian Gulf entirely, dramatically extending voyage times and pushing freight costs higher.

According to freight analytics firm Xeneta, at least 147 container ships are currently sheltering in the Persian Gulf amid the uncertainty. The buildup is creating port congestion, delays, and rising shipping premiums that are quickly spreading through global trade networks.

Logistics analysts warn that if the disruption persists for several weeks, it could trigger a cascade of economic effects similar to those seen during the pandemic — including higher transportation costs, slower delivery times, and shortages of key industrial inputs.

Energy markets remain the immediate flashpoint.

With the Strait of Hormuz effectively closed to much of global shipping and Gulf producers warning that exports could halt within days, traders are increasingly pricing in the possibility of a historic supply shock.

Should crude approach the $150-per-barrel threshold projected by energy officials, the impact would reverberate far beyond oil markets, raising transportation costs, lifting electricity prices, and intensifying inflation pressures worldwide.

So far, markets remain caught between the hope that the conflict will remain contained and the growing realization that the Middle East — the heart of the world’s energy system — has once again become the epicenter of geopolitical risk.

OpenAI CEO Sam Altman took a subtle aim at rival Anthropic on Thursday while defending his company’s relationship with the U.S. government, arguing that it would be “bad for society” if powerful technology firms abandoned democratic processes simply because they disagreed with political leadership.

Speaking during the Morgan Stanley Technology, Media & Telecom Conference, Altman said it was important for private companies to recognize the authority of elected institutions.

“The government is supposed to be more powerful than private companies,” he said, cautioning against a scenario where technology firms circumvent public institutions because “some people don’t like the person or people currently in charge.”

The comments come at a delicate moment in the intensifying rivalry between OpenAI and Anthropic — two of the world’s fastest-growing artificial intelligence developers — and as tensions escalate between Anthropic and the U.S. defense establishment.

Anthropic CEO Dario Amodei reportedly criticized Altman’s relationship with President Donald Trump in a memo to staff, saying Anthropic had not offered “dictator-style praise” to Trump, while suggesting OpenAI had been more accommodating.

The dispute widened after disagreements between Anthropic and the U.S. Department of Defense over how its artificial intelligence models could be used by the military. Negotiations deteriorated in recent weeks, culminating in Defense Secretary Pete Hegseth declaring Anthropic a “Supply-Chain Risk to National Security” in a post on X.

Soon after, President Trump ordered all federal agencies to “immediately cease” using Anthropic’s technology, effectively cutting the company off from a potentially lucrative government market that many AI firms view as strategically important. Within hours of that directive, OpenAI announced its own agreement with the Pentagon — a move that sparked criticism across the technology sector and among policymakers who viewed the timing as opportunistic.

Altman acknowledged that perception, saying the announcement “looked opportunistic and sloppy,” but insisted the company’s intention was to prevent the dispute from escalating further.

“It is complicated, we are busy with other things,” Altman said. “But last week, when things started to get into a fight, it became increasingly clear to us that there was a chance things were going to go very badly.”

The development is seen as a pointer to how the AI industry is becoming increasingly entangled with geopolitics and national security policy, as governments view advanced artificial intelligence systems as critical strategic infrastructure.

For OpenAI, the Pentagon partnership appears to represent more than a simple commercial contract. Analysts say it strengthens the company’s standing in Washington at a time when policymakers are shaping rules that could determine the future structure of the AI industry.

Founded in 2015 as a nonprofit research lab, OpenAI has rapidly evolved into one of the most valuable technology companies in the world following the launch of ChatGPT in 2022. The chatbot triggered a global surge of interest in generative AI and propelled the company into the center of the tech industry’s most consequential race.

Last week, OpenAI announced a massive funding round worth $110 billion that valued the company at roughly $730 billion before the new capital was injected — a figure that places it among the most highly valued technology firms globally. The company’s commercial momentum has been equally striking. ChatGPT now supports more than 900 million weekly active users, up from 800 million in October, according to company figures.

Financially, OpenAI’s annual revenue run rate has climbed above $25 billion, according to sources familiar with the company’s finances. Anthropic, which has emerged as one of its closest competitors, is believed to have surpassed $19 billion in annual revenue run rate. Yet the political fallout from the Pentagon dispute has produced sharply different outcomes for the two companies.

OpenAI has faced a backlash among some users and developers who view its deepening military ties as a departure from the company’s original mission as a nonprofit research organization focused on ensuring artificial intelligence benefits humanity. The criticism has translated into a wave of uninstallations of the ChatGPT app in some developer and privacy-focused communities, according to industry tracking platforms.

Anthropic, meanwhile, has seen a surge in downloads of its AI assistant products as some users migrate toward alternatives perceived as more independent from government or military partnerships.

At the same time, OpenAI appears increasingly willing to pursue defense contracts as a strategic lever. Military partnerships can provide both large, stable revenue streams and privileged access to government research funding, while also strengthening relationships with policymakers responsible for regulating advanced AI systems.

U.S. officials view AI as a critical domain in the country’s broader technological rivalry with China, making collaboration with leading domestic developers a national priority. The Pentagon’s interest in generative AI spans a wide range of potential uses, including intelligence analysis, cybersecurity defense, battlefield logistics, and autonomous systems. Securing partnerships with companies capable of building the most advanced models has therefore become a strategic objective for the U.S. government.

The dispute involving Anthropic and the Defense Department underlines a growing tension many AI firms face as they balance commercial opportunities with ethical considerations around military use of their technology. Anthropic has positioned itself as a company emphasizing AI safety and governance, often highlighting the potential risks posed by advanced models. That stance has sometimes translated into caution around certain government applications. OpenAI, by contrast, appears to be charting a more pragmatic path — cooperating closely with state institutions while attempting to frame such engagement as part of a broader democratic framework.