Oil rises as risks of prolonged Mid-East conflict heighten supply worries
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Brent crude futures climbed 34 cents, or 0.35 per cent, to US$97.34 a barrel.
PHOTO: REUTERS
- Oil prices rose due to increased risks of a prolonged Middle East conflict and Iran's threats to retaliate against US attacks, raising supply disruption concerns.
- Brent crude reached its highest level since July 24, driven by tensions around the Strait of Hormuz, a crucial global oil shipping route.
- Analysts predict supply constraints through 2026, with Goldman Sachs raising price forecasts, expecting disruptions to persist into 2027 amid ongoing conflict.
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SINGAPORE - Oil prices extended gains to multi-week highs on Sept 8 as risks of a prolonged conflict in the Middle East grew after Iran threatened to retaliate against any new US attacks on its assets, heightening worries over supply disruption.
Brent crude futures climbed US$1.25, or 1.3 per cent, to US$98.25 a barrel by 6.30am GMT. US West Texas Intermediate (WTI) crude was at US$93.70 a barrel, up US$2.22, or 2.4 per cent.
Brent earlier rose to as much as US$98.79 a barrel, its highest since July 24, while WTI reached US$94.21 a barrel, its highest since June 8.
Following the Labour Day holiday in the US on Sept 7, WTI was playing catch-up to Brent, which absorbed the weekend’s escalation a day earlier, said Suvro Sarkar, head of energy research at DBS Bank.
“Overall, we believe the recent uptick in hostilities between the US and Iran has the potential to materially change markets’ reading of oil price related risks not only for the rest of 2026, but well into 2027 now,” he said.
On Sept 5, US forces struck three Iranian oil tankers, including one near Kharg Island, Iran’s main oil export hub, according to US Central Command. The attacks followed strikes by Iran’s Revolutionary Guards on US warships operating in the region.
“The recent escalation of the Middle East conflict has increased the likelihood of a prolonged stand-off, punctuated by calibrated military action by the US and Iran. This could see Persian Gulf supply remain constrained through the rest of 2026,” Daniel Hynes, an analyst at ANZ, said in a note.
“We don’t expect a full return to pre-war throughput until late Q1 or early Q2 2027.”
Shipping traffic through the Strait of Hormuz also slowed at the start of this week, after Iran threatened on Sept 7 to retaliate for any new US attacks.
Meanwhile, Goldman Sachs raised its Brent price forecast by US$5, to US$85 for December and to US$80 for 2027.
It also raised its WTI price forecast to US$80 for December and to US$75 for 2027.
These reflect its new assumption that Middle East shipping disruptions will continue into 2027.
In financial services platform Marex’s September commodity outlook, analyst Ed Meir said that as long as the war continues – which it thinks it will, given “the multitude of issues that have yet to be addressed” – crude oil prices will likely remain elevated through the end of 2026. REUTERS
