Market Overview

On Tuesday, Brent crude futures for November delivery rose 1.8% to $98.79 a barrel, briefly breaching the $99 per barrel threshold, while U.S. West Texas Intermediate (WTI) for October delivery gained 2.7% to $94 a barrel. Both contracts continued the upward momentum from the previous week, which saw surges of 9.3% for Brent and 9.7% for WTI.

Geopolitical Drivers

The price increase coincided with renewed kinetic military actions between the United States and Iran. U.S. Central Command reported Saturday strikes on three Iranian crude‑oil carriers in retaliation for alleged IRGC missile attacks on two U.S. Navy warships. Iran’s state media responded by claiming attacks on six vessels in the Strait of Hormuz and the Persian Gulf, including three tankers and three U.S. vessels. Iranian officials, including Mohsen Rezaee of the Supreme National Security Council, warned of new missile capabilities, while Speaker Mohammad Bagher Ghalibaf highlighted the vulnerability of American oil and gas assets in the region. Iran also asserted it had captured a U.S. autonomous submarine at the Strait of Hormuz and reported further explosions on Kharg Island. The Wall Street Journal noted a second wave of Iranian attacks on U.S. Navy ships, though the U.S. had not confirmed any damage.

Supply‑Side Impact

The escalation has heightened concerns over oil flows through the Strait of Hormuz. TankerTrackers.com estimated that Middle‑East crude exports in August were down 39% from a January‑February baseline of 18.5 million barrels per day (bpd). Peter Taylor, head of commodity strategy at Macquarie, estimated roughly 7 million barrels per day of crude, condensate and refined products continue to transit the strait, acknowledging the heightened risk to vessels.

Downstream Effects

Higher global oil prices translated into a record diesel price in the United States, with GasBuddy reporting a national average of $5.90 per gallon—the first time the level was reached. Reports also emerged of drone and missile strikes targeting Saudi Aramco’s 400,000‑bpd Jazan refinery near the Red Sea, adding to refined‑product supply concerns.

Market Forecasts and Inventories

Goldman Sachs raised its Brent and WTI price forecasts by $5, projecting Brent at $85 and WTI at $80 for December 2026, and Brent at $80 and WTI at $75 for 2027, citing expected persistent Middle‑East shipping disruptions. The firm noted that OECD commercial land inventories have barely drawn down since the conflict began, limiting the immediate supply deficit, with draws concentrated in strategic reserves, oil‑on‑water stocks, and Chinese inventories. It also expects Middle‑East production to recover gradually in the second half of 2027 as dark flows increase and new pipelines come online.

Strategic Petroleum Reserve

U.S. government data showed that the Strategic Petroleum Reserve (SPR) fell by 1.2 million barrels in the week ending 4 September, leaving a total of 285.4 million barrels—the lowest level recorded since November 1982.

Analyst Commentary

Taylor emphasized that the situation is neither a “max greed” nor a “max fear” scenario, given the continued flow of oil through Hormuz despite the risk of vessels being struck.