Brent crude hits $100 for first time since July, futures drop

Brent crude prices for November delivery surged above the US$100 mark on Wednesday, marking their highest level since late July. This rise was driven by heightened tensions between the United States and Iran, as well as concerns over potential further supply disruptions in the Middle East. The European benchmark for Brent rose to US$100.19 a barrel on the London futures market, up 2.20%, marking the fourth consecutive day of gains.

The escalation of conflict between the U.S. and Iran came to the forefront after Iran's Revolutionary Guard claimed it had attacked two U.S. warships, along with U.S. bases in Jordan and other vessels attempting to cross the Strait of Hormuz, in response to earlier strikes on Iranian tankers. The U.S. Central Command, in turn, stated it had destroyed five vessels believed to be linked to the Revolutionary Guard Corps as retaliation for the attacks on one of its warships.

However, neither account has been independently verified, and other reports described those five vessels as oil tankers.

While the Washington-Tehran exchange is a significant factor in the rally, other events contributed as well. Earlier in the week, Houthi militias launched strikes on energy facilities in Saudi Arabia, including the Jazan area, resulting in over 70 people being wounded and causing disruptions at some sites. Meanwhile, Iran has reportedly come close to an agreement with Oman to manage vessel transit through Hormuz, a de-escalation track that helped ease prices last week.

Despite this progress, the current levels remain below the all-time highs witnessed earlier this year during the peak phase of the conflict. In March, Brent prices reached US$102, and just weeks later, futures topped US$109, with dated Brent surpassing US$140, its highest level since 2008. The market is currently operating with thin margins due to reduced inventories.

The U.S. Strategic Petroleum Reserve fell below 290 million barrels, its lowest level since 1982, as major economies tapped into stockpiles following a release coordinated by the International Energy Agency.

Recent forecast adjustments by Goldman Sachs further highlight the bullish outlook for Brent. The investment bank raised its December 2026 price predictions by five dollars, forecasting US$85 for Brent and US$80 for WTI. Should Gulf production remain four million barrels per day below prewar levels, the bank warns that the barrel could exceed US$120 in 2027, a scenario they do not consider as their base case.

The geopolitical landscape also underscores the importance of the Strait of Hormuz. Prior to the conflict, approximately 20% of the world's oil supply passed through this crucial waterway.