Oil prices climb as Middle East tensions stoke supply fears

Oil prices extended their upward climb on Tuesday as the risk of a prolonged Middle East conflict intensified, stoking concerns over global supply disruptions. Brent crude futures rose 0.35% to $97.34 a barrel, while U.S. West Texas Intermediate (WTI) gained 1.26% to $92.63.

The gains followed a session in which Brent touched its highest level since late July, as traders built a risk premium into prices amid heightened tensions around the Strait of Hormuz, a critical chokepoint for global crude shipments.

Iran warned on Monday that energy infrastructure across the Gulf, including U.S. oil and gas interests, was vulnerable. The warning came after tit-for-tat strikes over the weekend, with no sign of a diplomatic breakthrough. On Saturday, U.S. forces struck three Iranian oil tankers, including one near Kharg Island, Iran's main oil export hub, according to U.S. Central Command. The attacks followed strikes by Iran's Revolutionary Guards on U.S. warships in the region.

Analysts expect the standoff to persist. Daniel Hynes of ANZ noted that the escalation raises the likelihood of a prolonged conflict with calibrated military action, potentially keeping Persian Gulf supply constrained through the rest of 2026. He added that a full return to pre-war throughput may not occur until late Q1 or early Q2 2027.

In response, Goldman Sachs raised its December 2026 price forecasts for Brent and WTI by $5, to $85 and $80 per barrel respectively, and lifted 2027 forecasts to $80 and $75, reflecting expectations that shipping disruptions will continue into next year.

Marex's September commodity outlook, authored by Ed Meir, also suggested that crude prices will likely remain elevated through year-end, given the unresolved issues driving the conflict.