Brent Oil Surges to New Highs as US, Iran Tensions Escalate

Oil prices have surged to new highs, with Brent crude reaching $107.30 per barrel as of this morning. The recent rejection by President Trump of Iran's proposal has led to increased skepticism about a Strait of Hormuz reopening and markets are pricing in a prolonged period of elevated oil prices well into 2027.

According to Henry Allen and Jim Reid from Deutsche Bank, the immediate driver behind the price increase was the weekend news that President Trump had rejected Iran's proposal. As a result, Brent crude rose by 0.92% on Friday to $105.28/bbl and further increased by 1.92% this morning to $107.30/bbl.

The December 2027 Brent future has also reached new highs, closing at $80.29/bbl yesterday and increasing to $80.67/bbl this morning. This indicates that markets are pricing in a longer period of high prices stretching well into 2027.