Brent Crude Prices Seen Surging Above $100/Barrel Amid Escalating US-Iran Tensions

Oil markets are bracing for another price surge due to escalating tensions between the US and Iran. Renewed attacks in the region have wiped out nearly a month of calm, with Brent crude oil prices expected to rise above $100 per barrel in September.

The recent round of US-Iran strikes has added to the supply risk, flaring up the geopolitical premium in the oil market. Analysts are warning that the Strait of Hormuz remains a key upside risk for crude, as market buffers have largely eroded.

According to estimates from 10 brokerages, the September Brent crude oil contract on the Intercontinental Exchange is seen at $86.25-$105.00 per barrel this month. At 0843 IST, Brent crude was trading at $96.90 per barrel, 8.5% higher from Aug. 30.

Kotak Securities' Anindya Banerjee noted that the spread between Brent and WTI is an indicator of the geopolitical premium, which has increased to nearly $5 per barrel compared to a $3 difference in June. However, Arthavrksh's Rao cautioned that the Brent-WTI spread is not always a reliable gauge of the Iran-related geopolitical premium.