Oil Prices Near $100 as Prolonged US-Iran Conflict Fuels Supply Fears
LONDON, UNITED KINGDOM — WEB DESK: Global oil prices moved closer to the psychologically important $100-a-barrel mark on Tuesday as investors grew increasingly concerned that prolonged fighting between the United States and Iran could keep Middle Eastern energy supplies constrained well into 2027.
Brent crude futures climbed to around $97.49 per barrel, gaining 49 cents or 0.5% by 0400 GMT, while US West Texas Intermediate rose $1.44, or 1.6%, to $92.92 per barrel, according to Reuters.
The latest gains followed a strong Monday session in which Brent settled at $97.31, after reaching an intraday high of $98.06 — its highest level since July 24.
The rise reflects growing concern that the US-Iran conflict could remain unresolved for longer than previously expected, keeping Gulf oil exports and critical maritime routes under pressure.
Hormuz Tensions Drive Oil Higher
The Strait of Hormuz remains at the centre of market concerns.
The strategic waterway is one of the world’s most important energy corridors, and disruption to commercial shipping has sharply reduced the volume of oil moving out of the Gulf.
Iran has threatened retaliation against further US attacks and warned about the vulnerability of energy infrastructure across the region. Tehran has also announced plans for a new maritime exclusion zone in the Persian Gulf.
Shipping activity through Hormuz slowed again at the beginning of the week.
Kpler data cited by Reuters showed that only seven commodity vessels crossed the strait on Monday, compared with eight on Sunday. The figures may undercount actual traffic because some vessels can operate with their transponders switched off.
Reduced shipping through the waterway increases concerns about crude availability and adds risk premiums to international oil prices.
Gulf Oil Flows Remain Well Below Pre-War Levels
The scale of the disruption is significant.
Middle Eastern crude shipments are currently estimated at around 11 million barrels per day, compared with approximately 18 million barrels per day before the Iran war began seven months ago, according to Argus data cited by Reuters.
Flows through Hormuz have partially recovered at different points during the conflict, but remain volatile.
In the week before fighting intensified again on August 30, around 8 million to 9 million barrels per day had been moving through the strait. More recently, flows fell below 2 million bpd, although the moving daily average remained around 4 million to 5 million barrels.
That uncertainty is keeping traders focused on whether the conflict will cause another sustained deterioration in physical oil supplies.
Conflict Could Affect Oil Markets Into 2027
Energy analysts are increasingly warning that the consequences may extend beyond the remainder of 2026.
Suvro Sarkar, head of energy research at DBS Bank, said the latest escalation could materially change how markets assess oil-price risks for both the rest of 2026 and well into 2027.
The Express report said analysts see the possibility that Gulf supply restrictions could persist through the end of this year, with normal pre-war supply conditions potentially not returning until late in the first quarter or early in the second quarter of 2027.
Goldman Sachs has meanwhile raised its December 2026 oil forecasts, lifting its Brent projection to $85 per barrel and WTI to $80 because of the increased probability of continued Middle East shipping disruptions.
Why Has Brent Not Crossed $100 Yet?
Despite major disruptions, benchmark Brent remains below $100.
Several factors have prevented an even sharper increase.
Oil continues to move through alternative routes, while producers outside OPEC — including the United States, Canada and Guyana — have increased supply. Russian crude exports have also remained relatively resilient.
Demand growth has weakened as well, particularly in China, while strategic reserves have provided an additional buffer against shortages.
However, conditions in the physical oil market appear tighter than headline Brent futures suggest, with some spot crude prices already trading above $100 and global diesel markets experiencing significant shortages.
Higher Oil Prices Raise Global Inflation Risks
A sustained rise in crude prices could have consequences well beyond energy markets.
Higher oil costs can increase petrol and diesel prices, transportation expenses, aviation costs, manufacturing costs and inflation, particularly in countries heavily dependent on imported energy.
The impact can be especially significant for emerging economies because higher crude prices increase their import bills and demand for US dollars.
For Pakistan, which imports a large share of its petroleum requirements, prolonged crude prices near or above $100 could increase pressure on the country’s petroleum import bill, inflation outlook and domestic fuel prices.
The precise domestic impact would also depend on the rupee-dollar exchange rate, international refined-product prices, government taxes and petroleum levies.
Markets Watch Iran-US Escalation
Oil traders are now closely monitoring the next stage of the conflict.
Iran has threatened what it called “economic warfare” if attacks on its assets continue and retains the ability to disrupt maritime traffic around Hormuz.
The market’s direction will therefore depend heavily on whether hostilities intensify or move towards de-escalation.
For now, investors are pricing in a greater probability that the conflict will persist — keeping Gulf exports vulnerable and oil prices elevated.
With Brent already trading above $97 and recently touching $98.06, the $100 threshold is once again within sight. Whether it is breached sustainably will largely depend on the scale and duration of supply disruptions through the Gulf and Strait of Hormuz.
