Oil back at $100: Time to worry?

Oil back at $100: Time to worry?

Renewed hostilities between the US and Iran, coupled with Houthi attacks in the Red Sea, are raising concerns as global oil inventories remain severely depleted
Global oil prices have surged toward $100 per barrel as fighting has again escalated in the Middle East.
Renewed hostilities between the US and Iran have again brought traffic through the Strait of Hormuz to a near halt, while the Tehran-allied Yemeni Houthis have joined the fray with attacks on tankers in the Red Sea and a naval blockade against Saudi Arabia in the Bab el-Mandeb Strait, at the mouth of the Persian Gulf – the second-most important route for energy shipments after Hormuz. Hormuz and Bab el-Mandeb together carry the equivalent of roughly a quarter of the world’s oil supply.
Global crude benchmark Brent futures reached as high as $102 per barrel on Thursday before closing slightly lower at $100.69 a barrel, the highest settlement level for Brent since May 22. Although Brent slipped back below $100 on Friday, it remained up more than 12% for the week and nearly 40% above its level when the Iran war began in February.
US President Donald Trump has promised major military punishment for Iran and the Houthis following the Red Sea strikes, warning that Tehran would be held directly responsible for the group’s actions and fueling expectations of a stronger military response. Analysts around the world have warned of further price spikes as major oil-producing hubs and supply routes become increasingly engulfed by war.
Goldman Sachs said Brent could exceed $120 a barrel in the fourth quarter and average $100 next year if disruptions in the strait continue through 2027, with further upside if the Bab el-Mandeb Strait and Suez Canal also face prolonged disruption. JPMorgan calculates each additional month of oil supply disruption could add around $7 to $8 a barrel to Brent, pushing monthly average prices to roughly $114 if the disruption lasts three months.
Oil already topped $100 this year – why worry this time?
Immediately after the conflict began and traffic through the Strait of Hormuz was blocked, Brent crude soared to a four-year high of $126.41 a barrel by the end of April. The US benchmark, West Texas Intermediate (WTI), also climbed to nearly $120 per barrel in March.
Read more The spike fueled fears of a worst-case scenario in which oil prices would spiral higher and inflict severe damage on the global economy. Numerous analysts, energy economists, and even Trump himself warned that a prolonged stalemate or direct attacks on Gulf energy infrastructure could send crude into uncharted territory above $200 a barrel, triggering runaway inflation, higher interest rates, panic buying at gas stations, and a sharp slowdown in global economic growth. The International Energy Agency (IEA) described the conflict as the greatest global energy security challenge on record.
However, the worst-case scenario never materialized. Prices retreated steadily through June, eventually even falling below $70 a barrel. The decline followed the temporary US-Iran ceasefire memorandum and the resumption of tanker traffic through Hormuz, aided by a massive international release of strategic petroleum reserves and a sharp drop in global demand, particularly in China.
The pullback, though, may have created a false sense of complacency. Even Trump appears to have abandoned his earlier habit of reassuring markets with claims that a deal is just around the corner. The problem is that the market is far more stretched because the earlier reserve releases have left a much smaller buffer this time around.
What ultimately kept oil prices from spiraling out of control during the first round of hostilities was the willingness of countries to dip into storages. On March 11, the IEA’s 32 member states unanimously approved a drawdown of 400 million barrels of crude and refined products. Of that, the US committed to releasing 1