Oil prices have experienced significant volatility as renewed hostilities between the United States and Iran have heightened concerns over prolonged conflict and energy supply disruptions in the Middle East. West Texas Intermediate (WTI) oil edged lower to around $90.40 per barrel during Asian trading on Tuesday, despite ongoing geopolitical tensions and supply risks in the region [1]. In contrast, U.S. WTI futures for October advanced 1.07% to $92.56 per barrel, while international benchmark Brent crude for November delivery gained 0.20% to $97.20 a barrel, marking a third consecutive day of gains and reaching six-week highs [2].
The escalation follows a series of strikes over the weekend: the U.S. military targeted three Iranian oil tankers after Iran launched ballistic missiles at two U.S. Navy warships [2]. The Iranian Foreign Ministry condemned the attacks on commercial vessels as a "war crime" and "economic warfare" [2]. Iranian Parliament Speaker Mohammad Bagher Ghalibaf warned, "Strike our assets and you get struck," in response to U.S. Defense Secretary Pete Hegseth's statement that the U.S. would "destroy (and sink)" Iranian oil tankers if Iran fired on U.S. vessels [2].
The conflict has sharply reduced regional oil supply, with Saudi Aramco’s facilities in Jazan near the Red Sea targeted again, though damage was limited [1]. Despite these risks, approximately 7 million barrels a day of crude and refined products continue to pass through the Strait of Hormuz [1]. Iran also announced that an agreement with Oman to manage shipping through the Strait is nearing completion, raising concerns about Tehran’s growing influence over this critical waterway [1].
Tight U.S. domestic inventories are compounding supply concerns, with gasoline and distillate fuel stocks substantially below year-ago and five-year seasonal averages, according to PVM Energy analysts cited by Reuters [1]. The recent surge in oil prices—nearly 10% last week—has also pushed gas prices to record highs [1][2].
Analysts at Societe Generale maintain that the uptrend in Brent remains intact, with last week's low near $89 providing short-term support and limited downside risk [1]. Goldman Sachs raised its Brent and WTI price forecasts by $5 for December 2026, to $85 and $80 per barrel respectively, and expects shipping disruptions to persist into 2027, with production gradually recovering by the second half of that year [2]. The bank noted that markets are increasingly pricing in a prolonged Middle East conflict, as evidenced by elevated Persian Gulf-to-China crude tanker rates [2].
President Trump commented that oil prices will "drop precipitously ... when we WIN the war with Iran" [2].
CONCLUSION
Escalating U.S.-Iran tensions have driven oil prices to multi-week highs and fueled concerns over prolonged supply disruptions in the Middle East. Analysts and banks expect elevated prices and continued volatility, with market participants closely watching geopolitical developments and inventory levels. The situation remains fluid, with both immediate and longer-term implications for global energy markets.