Oil prices extended their gains on Tuesday as the risk of a prolonged Middle East conflict raised concerns over crude supply, particularly with tensions around the Strait of Hormuz continuing to escalate.
Brent crude futures rose 34 US cents or 0.35% to US$97.34 a barrel by 0000 GMT, while US West Texas Intermediate (WTI) crude climbed US$1.15 or 1.26% to US$92.63 a barrel.
Brent had already climbed to its highest level since July 24 in the previous session as traders added a risk premium to crude prices amid growing concerns over disruptions around the Strait of Hormuz, a key route for global oil shipments.
The latest pressure came after Iran warned that energy infrastructure across the Gulf, including US oil and gas interests, could be targeted. The warning followed a series of strikes over the weekend, with little indication of a diplomatic breakthrough.
US forces on Saturday struck three Iranian oil tankers, including one near Kharg Island, Iran’s main oil export hub, according to US Central Command. The attacks came after Iran’s Revolutionary Guards struck US warships operating in the region.
“The recent escalation of the Middle East conflict has increased the likelihood of a prolonged standoff, punctuated by calibrated military action by the U.S. and Iran. This could see Persian Gulf supply remain constrained through the rest of 2026,” ANZ analyst Daniel Hynes said in a note.
“We don’t expect a full return to pre-war throughput until late Q1 or early Q2 2027.”
Goldman Raises Oil Price Forecasts
The prospect of prolonged disruption has also prompted Goldman Sachs to raise its crude price forecasts.
The investment bank increased its December 2026 Brent forecast by US$5 to US$85 a barrel and its WTI forecast by US$5 to US$80.
For 2027, Goldman raised its Brent and WTI forecasts to US$80 and US$75 respectively, reflecting its assumption that shipping disruptions in the Middle East could continue into next year.
Marex analyst Ed Meir also expects crude prices to remain elevated through the end of the year while the conflict continues.
“As long as the war continues, which we think it will given the multitude of issues that have yet to be addressed,” Meir said in Marex’s September commodity outlook, crude oil prices are likely to remain elevated through year-end.
Reuters
