Oil prices surged to multi-week and six-week highs, with Brent crude futures nearing $99 and U.S. West Texas Intermediate (WTI) crude reaching approximately $94 a barrel. This sharp increase is primarily attributed to heightened tensions in the Middle East, including new US strikes on Iranian oil tankers and retaliatory threats from Iran, as well as Houthi attacks on Saudi energy infrastructure that injured 73 civilians and temporarily halted operations. The escalating conflict has severely impacted global oil supply, forcing nations to deplete stockpiles to meet demand.
The renewed hostilities have significantly reduced traffic through key waterways like the Strait of Hormuz, which normally handles over 20% of the world's energy supply. Data from Kpler indicates that only an average of 10 commodity ships transited the Strait of Hormuz daily over the past 10 days, the lowest since May. This slowdown in shipping, coupled with direct attacks on energy facilities and tankers, has intensified fears of a major supply shock in the market. Brent crude has risen 36% since the war began, and motor club AAA's national average gas price has increased by 40%.
Financial analysts anticipate further price increases if the conflict persists. Goldman Sachs has raised its December 2026 Brent forecast to $85 and WTI outlook to $80, and their analysts project Brent could exceed $120 if Persian Gulf oil flows remain low due to increased shipping attacks. HSBC analysts concur, suggesting Brent could reach around $120 if diplomatic efforts fail and Hormuz flows stay near current levels, causing inventories to deplete to operational lows. Diesel prices are already at an all-time high, double the price of crude, signaling current market tightness.
