As of 3:09 p.m., Brent crude was up 1.71% at $98.66 a barrel, while West Texas Intermediate gained 2.84% to $94.08. Both benchmarks have climbed to six-week highs, reversing much of the decline seen after a ceasefire had raised hopes of a durable resolution.
The latest leg higher came after Iran warned the US of “economic warfare” and said it had fired a new advanced missile at American warships. Iran also said it would establish a new shipping corridor in the Strait of Hormuz, potentially making tanker traffic through the key waterway even more challenging.
Oil markets were already on edge after Saudi Aramco facilities were hit in fresh attacks on Monday, according to the Financial Times. The strikes followed US military action against three Iranian oil tankers. The tit-for-tat attacks have also pushed gas and petrol prices higher, with US gasoline prices crossing $4 a gallon and hitting a record for Labor Day.
The latest developments have prompted analysts to push back expectations for a normalisation in oil supply. “We don’t expect a full return to pre-war throughput until late Q1 or early Q2 2027,” ANZ analyst Daniel Hynes said in a note, according to Reuters.
Goldman Sachs’ co-head of global commodities research Daan Struyven said Brent could reach $120 a barrel if attacks on shipping “broaden and intensify”. Energy Aspects, meanwhile, said commodity funds were turning bullish as concerns over a tipping point in global oil reserves grew.
Oil prices had fallen from a war-time high of $126 a barrel in late April to just above $70 in early July after the ceasefire. But as hopes of peace have faded, concerns over supply disruptions and dwindling strategic reserves have once again pushed prices higher.
