Middle East tensions and supply constraints raise the prospect of Brent topping $100, analysts say.
Oil prices have continued to climb as escalating military tensions in the region pushed crude above $90 a barrel on Wednesday. With the US and Iran yet to reach a peace agreement following a 60-day ceasefire, the key question is whether Brent could rise to $100 a barrel.
“The market is gradually coming to terms with the idea that supply disruptions are not a temporary shock, but a new reality,” said Alex Kuptsikevich, chief market analyst at FxPro.
He said Brent was also being supported by reports that US strategic reserves had fallen to their lowest level since 1982, with stocks declining by 5.3 million barrels in the previous week.
“With the safety cushion shrinking, the risks of an oil rally above $100 per barrel are mounting,” he said.
The 60-day ceasefire between the US and Iran has expired, with Washington indicating it does not plan to extend the agreement and Tehran warning of further escalation.
Meanwhile, attacks by the Houthis on oil infrastructure and shipping routes in the Red Sea have added to concerns over potential supply disruptions, increasing pressure on global crude prices.
“This has pushed Brent towards $92 a barrel, increased expectations of tighter US monetary policy and supported the US dollar index,” Kuptsikevich said.
On Wednesday afternoon, WTI was trading at $85.48 a barrel, up 0.64 per cent, while Brent gained around 0.5 per cent to $91.47 a barrel.
Naeem Aslam, chief investment officer at Zaye Capital Markets, said the immediate driver for oil prices was not stronger global demand but a renewed geopolitical risk premium linked to potential supply disruptions.
He said progress towards reopening the Strait of Hormuz had stalled, while tanker movements remained constrained and uncertainty over US-Iran relations had increased concerns about prolonged disruption to Gulf oil exports.
Aslam said statements from US President Donald Trump regarding Iranian shipping, Iran’s nuclear programme and US control of the Strait had further focused markets on physical supply risks, helping explain the sharp rise in oil prices earlier in the week.
However, the broader oil market remains caught between supply concerns and expectations of weaker global demand. While disruptions to Gulf production are reducing available crude, forecasts from producer groups continue to point to relatively modest demand growth.
“That is why oil is rising sharply on geopolitical headlines but not moving in a straight line,” Aslam said. He noted that any progress on Hormuz shipping, diplomatic developments or a recovery in production could quickly reduce the geopolitical premium, while renewed disruptions could push prices higher.
He said the key question was whether the loss of physical supply would remain large enough to outweigh weaker consumption trends. If Gulf exports remain restricted, Brent could stay above $90 a barrel. If supplies normalise, investors are likely to shift their focus back to demand growth, inventories and the strength of the global economy.
