Oil prices climb as Middle East tensions raise supply concerns

LONDON: Oil prices continued to rise on Tuesday as growing fears of a prolonged conflict in the Middle East increased concerns about disruptions to global crude supplies.

Brent crude futures rose 34 cents, or 0.35%, to $97.34 a barrel by 0000 GMT. US West Texas Intermediate (WTI) crude gained $1.15, or 1.26%, to $92.63 a barrel.

Brent had already climbed to its highest level since July 24 during the previous trading session as investors added a risk premium to oil prices amid increasing tensions around the Strait of Hormuz.

The strategically important waterway is a major route for global energy shipments. Any prolonged disruption in the area could significantly affect crude supplies and push prices higher.

Market concerns intensified after Iran warned that energy infrastructure across the Gulf, including US oil and gas interests, could be vulnerable to further attacks.

The warning followed a series of military exchanges between Iran and the United States over the weekend, with no clear indication of an immediate diplomatic breakthrough.

US forces reportedly struck three Iranian oil tankers on Saturday, including one near Kharg Island, a major Iranian oil export hub. The attacks came after Iran’s Revolutionary Guards carried out strikes against US naval vessels operating in the region.

Analysts said the latest escalation has increased the possibility of a prolonged confrontation between Washington and Tehran.

Daniel Hynes, an analyst at ANZ, said the conflict could keep Persian Gulf oil supplies constrained for the remainder of 2026. He also said a full return to pre-conflict production and shipping levels may not occur until late in the first quarter or early in the second quarter of 2027.

The prospect of continued supply disruptions has also prompted financial institutions to reassess their oil price forecasts.

Goldman Sachs raised its December 2026 Brent forecast by $5 to $85 a barrel and increased its WTI projection to $80. For 2027, the bank expects Brent to average around $80 and WTI around $75, based on an assumption that disruptions to Middle Eastern shipping could continue into next year.

Analysts at Marex also expect crude prices to remain elevated through the end of the year if the conflict continues.

The energy market is now closely watching developments around the Gulf, particularly the Strait of Hormuz, as traders assess the potential impact on oil production, shipping routes and global inventories.

A sustained disruption could increase transportation costs, tighten available supplies and add further pressure to fuel prices in major economies.