Brent Crude Surges Above $90 as Middle East Tensions Escalate

Oil prices have risen above USD 90 per barrel as tensions between the US and Iran escalate, leading to increased concerns over shipping through the Strait of Hormuz. Middle East supply disruptions are proving more prolonged than expected, impacting global oil supplies.

The latest forecast from OCBC strategists Sim Moh Siong and Christopher Wong predicts Brent crude will trade at USD 80 per barrel by the end of 2026, up from their previous estimate of USD 75 per barrel. This revised target reflects a slower recovery in Middle East supply due to ongoing US-Iran negotiations over reopening the Strait.

Despite oil prices adjusting to crude supply disruptions, inventories are dwindling, transport costs are rising, and diesel shortages are emerging as key constraints. The market has largely adjusted to crude supply disruptions by depleting buffers, but the bottleneck is now in diesel.