$100 Oil Is Back

Oil markets have erupted after a Persian Gulf squeeze drove Brent and WTI futures past $100 a barrel, the highest level since the 2022 Ukraine conflict. The catalyst is a de‑facto closure of the Strait of Hormuz, where a backlog of tankers and Iranian radio warnings have effectively choked the main export route. With limited coastal storage—especially in Kuwait—producers face forced cutbacks, amplifying price pressure and prompting immediate attention from global traders.

The conflict has spilled beyond crude, targeting critical infrastructure across the region. Israeli strikes on Iranian oil depots, Iranian attacks on Bahrain’s refinery, and assaults on desalination plants and Qatar’s LNG hub illustrate a new “no‑holds‑barred” posture. These disruptions threaten not only energy supply but also water security, a vital economic lifeline for Gulf states. Traders now price in a heightened risk premium, with Goldman Sachs projecting oil could climb to $150 per barrel if hostilities persist, feeding broader inflation concerns and pressuring downstream fuel costs.

Policymakers are scrambling for stabilising tools. The G7 is poised to discuss an emergency release from strategic petroleum reserves, while China’s sizable stockpiles offer additional market liquidity. Military options, such as naval escorts through the strait, remain tentative. Yet the longer‑term outlook is tempered by structural shifts: higher fuel efficiency, a growing share of natural gas and renewables, and the United States’ net‑export status. Together, these factors may limit the duration of the shock, but the immediate volatility underscores the fragile intersection of geopolitics and global energy markets.