Middle East Tensions Drive Crude Oil Prices to New Heights
Crude oil prices have risen as tensions in the Middle East continue to escalate. According to Kedia Advisory, Brent crude settled up 3.88% at ₹9,167 following a warning from Iran's Supreme Leader's military adviser that the conflict could expand into the Indian Ocean if further attacks occur. The adviser stated that the conflict could spread from the Persian Gulf, Strait of Hormuz and Red Sea toward the Indian Ocean.
Bank of America has increased its second-half 2026 forecast to $95 per barrel from $83, citing prolonged geopolitical tensions as its base case. However, the bank warned that persistent disruptions into spring 2027 could push front-month Brent above $150. Libya's National Oil Corporation reported daily losses of around 130,000 barrels after the closure of the Sharara-Zawiya pipeline.
US crude inventories increased by 3 million barrels to 426.4 million barrels in the week ended September 18, while Cushing stocks rose 2.3 million barrels to 23.7 million barrels. However, refinery crude runs declined by 519,000 barrels per day, and utilisation fell 2.8 percentage points to 94%. Gasoline inventories declined 1.7 million barrels to 206 million barrels, while distillate stocks fell 0.4 million barrels to 107.4 million barrels.
OPEC lowered its 2026 global oil demand growth forecast to 380,000 barrels per day, marking its fifth consecutive downward revision. The IEA warned that shrinking inventories and stretched refining capacity could tighten the market further if Middle East disruptions persist into 2027.