Oil prices are approaching $100 a barrel, reaching six-week highs, as renewed hostilities between the U.S. and Iran in the Strait of Hormuz and other regions disrupt crude oil flows in the Middle East. Brent crude futures rose $1.19, or 1.2%, to $97.47 a barrel, after hitting $97.93 earlier, its highest since July 24. U.S. West Texas Intermediate (WTI) crude also climbed, up 78 cents to $92.26 a barrel. These gains follow Brent's approximately 8% increase last week and WTI's nearly 10% rise.
The escalation in conflict includes U.S. forces striking three Iranian oil tankers on Saturday, one near Iran's key oil export hub, Kharg Island. In retaliation, Iran's Islamic Revolutionary Guard Corps targeted three oil tankers in the Strait of Hormuz and three U.S.-linked vessels elsewhere. Maritime intelligence firm Marisks described these attacks as a "major escalation," noting that commercial tankers are now being deliberately used as instruments of economic pressure. A Saudi-owned tanker was also attacked a week prior, resulting in two seafarer deaths.
The increased attacks have significantly impacted shipping traffic. Data from analytics firm Kpler shows that an average of only 10 commodity ships transited the Strait of Hormuz per day over the past 10 days, the lowest since May. Priyanka Sachdeva, head of market insights at Phillip Nova, warned that a material slowdown in tanker traffic could lead to a much larger supply shock. Goldman Sachs has even predicted that oil prices could rally to as much as $120 a barrel if shipping attacks continue to rise. Iran plans to announce a restricted zone outside the Strait of Hormuz in the coming days.
Adding to the market's concerns, Saudi Aramco's Jazan oil refinery was attacked on Monday, with damage currently being assessed. Despite these developments, OPEC+ maintained its oil output policy unchanged for October during its meeting on Sunday, as it needs to agree on new quotas before determining future output steps. Analysts from ANZ predict a prolonged standoff between the US and Iran, leading to constrained Middle East supply through the rest of 2026, with a return to pre-war throughput not expected until late Q1 or early Q2 of 2027.
