Brent nears $100: Why oil prices are rising

Two routes under attack

Brent crude has risen for a fifth consecutive day. On Thursday, September futures gained about 2.6% to $96.5 per barrel, while the price later approached $98. Just a few days earlier, oil was trading roughly $10 lower.

Loading...

The tweet was deleted by the author.

But we saved everything 🙂.

The latest jump followed an attack on the Saudi tanker Encelia in the Red Sea. The vessel was damaged and a fire broke out in its bow, although no crew members were injured. The Houthis said they had also attacked the tanker Layla and forced around ten vessels to abandon their journeys to Saudi ports.

At the same time, shipping through the Strait of Hormuz has nearly come to a halt. Iran is demanding that tankers coordinate their passage with Tehran and is attacking vessels that attempt to use the route along the coast of Oman. The number of tanker transits through the strait has fallen more than threefold in a week, from more than 90 to around 30. The market fears that disruptions in Hormuz could now be compounded by restrictions on supplies moving through the Red Sea.

The backup route is no longer enough

After the war began, Saudi Arabia sharply increased exports through the port of Yanbu on its western coast. Since March, around 5 million barrels of oil per day have been shipped from the port, more than twice the prewar level. About 80% of those supplies passed through the Bab el-Mandeb Strait on their way to major buyers in Asia.

Following the Houthi warnings, some tankers began avoiding the dangerous area. Vessels are traveling through the Suez Canal into the Mediterranean and then sailing around Africa to reach Asia. This route adds at least four weeks to the journey and more than doubles delivery times.

The largest tankers cannot pass through the Suez Canal fully loaded because of depth restrictions. Before entering the canal, they have to transfer part of their cargo into a pipeline and then reload it near Alexandria. Each additional operation increases transportation, fuel, and insurance costs.

A return to $120

According to Bloomberg, Goldman Sachs believes Brent could rise above $120 per barrel by the fourth quarter of 2026. This scenario could materialize if oil flows from the Persian Gulf fall below 45% of prewar levels and disruptions in the Strait of Hormuz and the Red Sea persist.

Loading...

The tweet was deleted by the author.

But we saved everything 🙂.

This is not the bank’s base-case forecast. If tensions in the Middle East ease, analysts expect Brent to trade at around $80 per barrel by the end of 2026 and at $75 next year. However, the risks are currently tilted to the upside because every new attack reduces the number of vessels willing to operate in the region and pushes insurance costs higher.

The market has already seen how quickly such a scenario can unfold. In late April, during the initial stage of the U.S.-Iran conflict, Brent rose above $126 per barrel. Falling global inventories and disruptions in the refining sector are adding further pressure. Since the start of the war, European diesel and U.S. gasoline prices have risen by about 65%, compared with an increase of roughly 30% in Brent itself.

Military force cannot solve the problem

The U.S. is trying to restore shipping through the Strait of Hormuz with airstrikes and increased patrols. Washington has spent several consecutive nights attacking Iranian missile storage facilities, air defense systems, coastal surveillance posts, and sites linked to maritime operations. Additional F-16 and F-35 fighter jets are also being sent to the region.

However, even a large-scale air campaign cannot quickly eliminate every threat, the Financial Times reported. Iran uses mobile launchers, drones, anti-ship missiles, and small high-speed boats. Some equipment can be concealed on islands and in coastal areas, while even basic maritime radar is enough to track tankers.

Iran does not need to close the strait completely. Hitting a single vessel from time to time may be enough to persuade shipowners that the risk is too high. According to former U.S. military officials, protecting tankers could require separate convoys involving two or three U.S. Navy vessels, but even that system would not rule out further attacks.

Everything depends on security

Until safe shipping is restored, the oil market will continue to react to every new attack. Brent has already approached $100, while prolonged disruptions in the Strait of Hormuz and the Bab el-Mandeb Strait could push prices back toward their April highs above $120.

The fastest way to stop prices from rising would be a lasting ceasefire and the restoration of clear rules for tanker passage. Airstrikes may weaken some of Iran’s military capabilities, but they cannot guarantee the safety of every vessel. As long as the U.S., Iran, and the Houthis continue exchanging strikes, the risk of further oil price increases will remain high.

This material may contain third-party opinions, none of the data and information on this webpage constitutes investment advice according to our Disclaimer. While we adhere to strict Editorial Integrity, this post may contain references to products from our partners.