Oil Nears $100 as Middle East Conflict Drags On — What Happens If Hormuz Disruptions Get Worse?
Oil prices pushed higher on Tuesday as the risk of a prolonged U.S.-Iran conflict intensified, raising fresh fears that disruptions around the Strait of Hormuz could tighten global energy supplies and send fuel costs even higher.
Brent crude futures rose 34 cents, or 0.35%, to $97.34 a barrel, while U.S. West Texas Intermediate climbed $1.15, or 1.26%, to $92.63 as of 0000 GMT. Brent had already reached its highest level since July 24 in the previous session as traders added a larger geopolitical risk premium to crude prices.
The latest rally comes after another escalation in the Middle East. Iran has warned that energy infrastructure across the Gulf, including U.S. oil and gas interests, could be vulnerable to further attacks. The warning followed a series of tit-for-tat strikes involving U.S. and Iranian forces.
The Strait of Hormuz has become the central concern for energy markets. The waterway is one of the world's most important oil transit routes, and disruptions there can quickly affect crude supplies, shipping costs and fuel prices across major economies.
Oil supply risk is growing
Analysts are increasingly warning that the current disruption could last much longer than initially expected.
ANZ analyst Daniel Hynes said the latest escalation increases the possibility of a prolonged standoff between Washington and Tehran, potentially keeping Persian Gulf oil supplies constrained through the remainder of 2026. ANZ does not expect a full return to pre-war oil throughput until late in the first or early in the second quarter of 2027.
That prospect is particularly significant because the global oil market has already absorbed a major shock this year.
The U.S. Energy Information Administration said disruptions to crude and petroleum-product flows through the Strait of Hormuz contributed to substantially higher and more volatile oil prices during the second quarter. Brent reached as high as $118 a barrel on April 29 before falling sharply as expectations for renewed shipping through the strait improved.
The International Monetary Fund has also warned that the market's remaining buffers are becoming thinner. It said the initial shock was partly absorbed through lower demand, additional production and inventory drawdowns, but much of that cushion has already been used.
Goldman Sachs raises its oil outlook
Goldman Sachs has responded to the worsening supply outlook by increasing its December 2026 Brent forecast by $5 to $85 a barrel and its WTI forecast to $80. For 2027, the bank raised its estimates to $80 for Brent and $75 for WTI, assuming shipping disruptions in the Middle East continue into next year.
The risk could be considerably greater if attacks on commercial shipping intensify.
Reuters reported that Goldman Sachs sees a potential path toward $120-a-barrel oil if attacks on vessels in the Middle East increase significantly.
Marex analyst Ed Meir likewise expects crude prices to remain elevated through the end of the year as long as the conflict continues.
Why Asia could feel the shock
The consequences extend far beyond oil traders.
Asia is particularly exposed to disruptions around the Strait of Hormuz because many economies in the region depend heavily on imported energy. Higher crude prices can raise the cost of gasoline, diesel, aviation fuel, shipping and electricity while increasing inflationary pressure on consumers and businesses.
S&P Global has warned that Southeast Asia should prepare for prolonged Middle East instability that could periodically disrupt energy supplies, shipping and trade. It also noted that higher freight and insurance costs are adding to the pressure on Asian refinery economics.
China, meanwhile, has been attempting to reduce its vulnerability by drawing on domestic resources and strategic petroleum reserves while expanding alternative energy and electric-vehicle adoption.
The bigger question: how high can oil go?
For now, the market is balancing two opposing forces.
On one side is the threat of prolonged supply disruption, particularly around the Strait of Hormuz. On the other is the possibility that weaker global economic growth could eventually reduce demand for crude.
But if the conflict continues to escalate and shipping through the region becomes increasingly restricted, traders could face a much tighter supply market.
That leaves oil dangerously close to the psychologically important $100-a-barrel threshold — and the next major military or shipping disruption could determine whether crude breaks above it.
The immediate question for markets is no longer simply whether oil prices will rise. It is how long the supply disruption lasts — and what happens if the Strait of Hormuz becomes even harder to navigate.
WWC ONE MEDIA M.J.E