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Will the Middle East conflict knock oil back up to $100 a barrel?
Analysts say that geopolitical tensions in the Middle East region and tighter crude oil supply raise Brent’s chances of breaking above $100 a barrel
- PUBLISHED: Wed 19 Aug 2026, 1:56 PM UPDATED: Wed 19 Aug 2026, 7:45 PM
Oil prices have been steadily rising as ongoing military escalation in the region has pushed oil above $90 a barrel on Wednesday. But will oil reach $100 a barrel as US and Iran have not yet reached a peace deal after a 60-day ceasefire?
“The market is gradually coming to terms with the idea that supply disruptions are not a temporary shock, but a new reality. Meanwhile, Brent is being supported by reports that US strategic reserves have fallen to their lowest level since 1982, losing 5.3 million barrels in the last week alone. The safety cushion is shrinking before our very eyes, and the risks of an oil rally above $100 per barrel are mounting,” said Alex Kuptsikevich, chief market analyst at FxPro.
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The 60-day ceasefire agreement between the US and Iran has expired and Washington has no intention of extending it, whilst Tehran has threatened to escalate the conflict. At the same time, the Houthis have stepped up attacks on oil infrastructure in the Red Sea.
“This has caused Brent to surge towards $92 per barrel, increased the likelihood of the US Federal Reserve tightening monetary policy, and allowed the US dollar index to rise,” added Kuptsikevich.
Brent crude futures were up 87 cents, or nearly one per cent, at $91.89 at 1600 GMT on Wednesday. US West Texas Intermediate crude futures were $1.17, or 1.4 per cent higher at $86.11 a barrel.
Naeem Aslam, chief investment officer at Zaye Capital Markets, said the immediate driver for oil is not stronger global consumption but a renewed geopolitical supply premium.
“Progress toward reopening the Strait of Hormuz has stalled, tanker movements remain constrained, and uncertainty around US-Iran relations has increased the probability investors assign to prolonged disruption of Gulf exports. US President Donald Trump's warning that Oman should not interfere with US policy surrounding Iranian shipping, combined with his insistence that Iran cannot obtain a nuclear weapon and his claim of US control over the Strait, is reinforcing the market's focus on physical supply risk. This helps explain why oil rose over two per cent on Monday,” he said.
The wider oil ecosystem, however, remains conflicted because supply risk is colliding with softer global demand expectations. International supply estimates point to a meaningful reduction in available crude as Gulf production remains disrupted, while producer-group projections continue to show relatively modest demand growth.
“That is why oil is rising sharply on geopolitical headlines but not moving in a straight line. Any improvement in Hormuz shipping, diplomatic progress or production recovery can quickly remove part of the geopolitical premium, while renewed disruption can push prices higher again.
“The key issue is whether the physical loss of supply remains large enough to overwhelm weaker consumption trends. If Gulf exports stay restricted, the market can continue supporting Brent above $90; if flows normalise, attention will quickly return to demand growth, inventories and the strength of the global economy,” added Aslam.
