Oil Prices Soar on Middle East Conflict Fears

Oil prices surged to multi-week highs on Tuesday due to growing concerns over a wider Middle East conflict. Brent crude rose to around $99 a barrel, while US West Texas Intermediate (WTI) gained more than 3%, after fresh attacks and threats between Iran and the US raised worries about oil supplies.

The Strait of Hormuz is at the centre of the oil market worries. Tanker traffic through the key waterway has fallen well below normal levels due to the conflict and growing security risks. Tim Waterer, chief market analyst at KCM Trade, said that oil prices are being pushed higher by two main factors: real supply tightness and a geopolitical risk premium.

The Strait of Hormuz is one of the world's most important oil routes, with around one-fifth of the world's daily oil and liquefied natural gas supplies passing through it. Analysts do not expect oil shipping through the Strait to quickly return to normal. Daniel Hynes, an analyst at ANZ, said a full return to pre-war shipping levels may not happen until late Q1 or early Q2 of 2027.

Goldman Sachs raised its oil price forecasts due to expected shipping disruptions. The bank increased its December 2026 forecast by $5, putting Brent at $85 a barrel and WTI at $80. Goldman Sachs also raised its 2027 forecasts to $80 for Brent and $75 for WTI.