Middle East Tensions Send Oil Prices Soaring
Oil prices have continued their upward trend as tensions in the Middle East escalate. Iran has warned of potential retaliation against US assets, heightening concerns over supply disruptions. Brent crude futures rose by $0.34 to $97.34 a barrel, while US West Texas Intermediate crude climbed by $1.15 to $92.63 a barrel.
The recent conflict has led investors to price in the possibility of sustained disruption around the Strait of Hormuz, a crucial waterway for global oil shipments. This could tighten supplies and raise transport risks, putting further upward pressure on crude prices.
Goldman Sachs has raised its Brent and West Texas Intermediate price forecasts by $5 to $85 and $80, respectively, for December 2026 and to $80 and $75, respectively, for 2027. The firm's analysts expect Middle East shipping disruptions to continue into 2027.
According to Daniel Hynes, an analyst at ANZ, the recent escalation of the conflict has increased the likelihood of a prolonged standoff, punctuated by calibrated military action by the US and Iran. This could see Persian Gulf supply remain constrained through the rest of 2026.