Brent Tops $91 as US-Iran Conflict Threatens Supply

Key Takeaways

• Brent crude rose 0.55% to around $91.51 per barrel, while WTI gained 0.36% to approximately $84.64 in early Wednesday trading.
• Continued US-Iran strikes and growing risks around the Strait of Hormuz are keeping a substantial geopolitical premium in oil prices.
• Houthi threats against Saudi-linked shipping have increased concerns that disruption could spread from the Gulf to the Bab el-Mandeb Strait.

Brent and WTI Extend Gains After Reaching Five-Week Highs

Oil prices moved higher on Wednesday, July 22, as escalating conflict between the United States and Iran increased concerns about further disruption to Middle Eastern energy supplies.

Brent crude futures gained 50 cents, or 0.55%, to approximately $91.51 per barrel in early Asian trading. US West Texas Intermediate crude rose 30 cents, or 0.36%, to around $84.64 per barrel, although trading volumes remained relatively low.

The latest advance came after both benchmarks climbed approximately 2% during Tuesday’s session. Brent settled $1.79 higher at $91.01, while WTI gained $1.68 to close at $84.91. These were the highest closing levels for Brent since June 10 and for WTI since June 11.

Brent has also remained in technically overbought territory for seven consecutive sessions. This indicates strong upward momentum but also suggests that the market could become vulnerable to short-term profit-taking if geopolitical tensions ease.

US-Iran Strikes Keep Supply Risks Elevated

Oil’s latest advance has been driven primarily by concerns about shipping and production rather than evidence of an immediate large-scale reduction in global supply.

US Central Command said it had completed its 11th consecutive day of strikes against Iran. The latest operation targeted military operations centres, maritime capabilities, aircraft hangars, drone storage facilities and logistics infrastructure.

According to US officials, the strikes were intended to reduce Iran’s ability to threaten commercial shipping through the Strait of Hormuz. CENTCOM claimed that Iran had attacked more than 30 commercial vessels transiting the waterway, although individual incidents remain difficult to verify independently.

The Strait of Hormuz remains the oil market’s central geopolitical risk. A significant share of global crude oil and liquefied natural gas exports normally passes through the narrow waterway. Even when physical production remains available, attacks, insurance costs and tanker delays can reduce effective supply and increase transportation expenses.

As a result, oil traders are closely monitoring vessel movements, export volumes and any signs of damage to Gulf energy infrastructure.

Houthi Threats Put Bab el-Mandeb Shipping in Focus

Supply concerns have expanded beyond the Strait of Hormuz after Yemen’s Iran-aligned Houthis announced what they described as a naval blockade against Saudi Arabia.

The group warned shipping companies against loading or unloading cargo at Saudi ports and threatened to target vessels that failed to comply. Two tankers carrying Saudi crude for customers in China and India subsequently reversed course in the Red Sea and headed towards the Suez Canal instead of continuing through the Bab el-Mandeb Strait.

The shipping warning is significant because the Bab el-Mandeb connects the Red Sea with the Gulf of Aden. It has become an increasingly important alternative route for Saudi oil exports as traffic through the Strait of Hormuz has declined.

Saudi Arabia’s Yanbu terminal was still operating, and there had been no confirmed attacks on commercial vessels in the Red Sea during the previous 48 hours. Nevertheless, rerouting tankers can lengthen delivery times, raise freight and insurance costs, and reduce the number of vessels available to transport crude.

For Gulf-based markets, simultaneous pressure on Hormuz and Bab el-Mandeb would represent a considerably larger risk than disruption at either waterway alone.

Could Brent Crude Rise Above $120?

Goldman Sachs has warned that Brent could exceed $120 per barrel during the fourth quarter if disruption through the Strait of Hormuz persists.

However, this is a high-risk scenario rather than the bank’s central forecast. Goldman’s base case assumes that regional tensions eventually ease, allowing Brent to average approximately $80 in the fourth quarter of 2026 and $75 in 2027. The more extreme forecast depends on prolonged shipping disruption and a slow recovery in Persian Gulf production.

The wide gap between the base case and the severe-disruption scenario highlights how sensitive the oil outlook has become to geopolitical developments. Physical supply losses, rather than military headlines alone, would probably be required for prices to remain sustainably above $100.

Higher prices may also weaken demand, encourage buyers to use stored crude and increase the attractiveness of alternative suppliers. These responses could eventually limit the scale of the rally.

US Inventory Data Could Limit Oil’s Advance

Geopolitical risk remains supportive, but US inventory data may prevent oil prices from rising in a straight line.

Preliminary figures from the American Petroleum Institute indicated that US crude and distillate inventories increased last week, while gasoline stocks declined. Official data from the US Energy Information Administration will provide a clearer view of domestic supply and fuel demand.

An unexpected increase in crude inventories could suggest that supply is exceeding refinery demand, potentially offsetting part of the geopolitical premium. Conversely, a larger-than-expected draw would reinforce concerns about market tightness.

Traders will also monitor gasoline demand during the US summer driving season, refinery utilisation and changes in American crude production.

Oil Price Outlook: Levels and Events to Watch

Brent’s move above $91 places the immediate focus on the $92–$95 region. A sustained break above this area could bring the psychologically important $100 level back into view. Initial support may be found near $90, followed by the recent breakout area around $88–$89.

For WTI, the $85–$86 range is the nearest resistance zone. Support may emerge around $83–$84, with $80 remaining a broader psychological level.

The next direction for oil prices will depend on whether the conflict causes measurable export losses. Further vessel attacks, restrictions at Saudi ports or a deeper decline in Hormuz traffic could push prices higher. Renewed ceasefire negotiations, safer shipping conditions or rising inventories could instead trigger a pullback.

Volatility is therefore likely to remain elevated as the market balances immediate supply data against the risk of a wider regional disruption.