Oil Price Today (August 21): Crude oil nears $95 as Iran peace deal hopes fade. What are experts saying?

Oil prices have remained relatively stable on Friday, but are on track for their second consecutive weekly increase as tensions between the U.S. and Iran continue to disrupt oil supplies from the Middle East. The peace deal between the two nations, which had been in place, expired recently and neither side has shown any interest in restarting negotiations. Additionally, U.S. President Donald Trump has threatened economic measures against countries supporting Iran.

Brent crude futures have risen by 4 cents to $93.82 a barrel, after gaining over 2% in the previous session. Conversely, U.S. West Texas Intermediate crude futures have dropped by 6 cents to $86.78 a barrel, following an 8% rise in the prior session. Over the past five days, Brent has gained more than 7%, while WTI has risen by more than 8%. Both benchmarks have reached their highest levels since July 24.

The concern is that the unresolved U.S.-Iran conflict could lead to long-term disruptions in oil supplies from major producers such as Saudi Arabia, Iraq, the UAE, and Kuwait. President Trump warned on Wednesday evening of "economic warfare" and isolation towards Tehran, as well as consequences for any country providing assistance to Iran. The UAE has recently suspended all financial and economic transactions with Iran until further notice, highlighting the strained relations between the two nations.

Experts are now discussing the potential impact on crude prices. JPMorgan estimates that each additional month of disruption could add $7 to $8 per barrel to Brent prices. If the disruption persists for three months, the bank anticipates Brent average monthly prices to reach around $114 a barrel. Goldman Sachs warns that Brent could climb to $120 a barrel if shipping disruptions through the strategically important Strait of Hormuz, the world's most crucial oil transit route, continue.

At the same time, Goldman Sachs expects tensions in the Middle East to eventually subside under their base case. They forecast Brent to average $80 a barrel in the fourth quarter and $75 a barrel in the following year. However, they note that risks remain on the upside, with potential disruptions through the Strait of Hormuz and the Red Sea lasting longer than anticipated.