U.S. crude futures surged to their highest level in 20 months on Thursday as investors grew increasingly concerned that the Middle East conflict could become protracted.

WTI crude soared 8.5%, settling near $81 per barrel, marking its highest level since July 2024. Brent crude closed above $85 per barrel.

In post-settlement trading, prices retreated after the Trump administration indicated it was evaluating options to address the war-driven price surge, including potential measures such as tapping emergency petroleum reserves.

Earlier in the day, reports emerged that the Chinese government had instructed the country’s largest refineries to suspend exports of diesel and gasoline. Japanese refiners also requested the release of crude from strategic petroleum reserves. Meanwhile, Kuwait reduced operating rates at three of its refineries.

On Thursday, several Arab nations and Israel reported intercepting Iranian missiles and drones, while Qatar advised residents to stay indoors. Tehran claimed it struck an oil tanker in the Persian Gulf, underscoring risks to regional shipping.

"If we see even one more successful attack on a tanker or energy infrastructure, or any sustained supply disruption, prices could surge significantly again," said Priyanka Sachdeva, senior market analyst at Phillip Nova Pte.

April WTI crude rose 8.5%, settling at $81.01 per barrel.

May Brent crude increased 4.9%, closing at $85.41 per barrel.