Oil Prices Surge Towards $92/barrel as Trump Denies US-Iran Negotiations: What’s Next for the Market?

Recent developments in the Middle East have significantly impacted oil markets, with prices nearing $92 per barrel due to heightened geopolitical tensions. Brent crude futures increased by 0.6% to $91.59, while West Texas Intermediate crude surged by 0.7% to $85.56. These rises follow a tumultuous week marked by attacks on tankers operated by the Abu Dhabi National Oil Company and a Saudi Aramco refinery, which propelled both benchmarks more than 5% higher last week. The expiration of a temporary ceasefire between the U.S. and Iran has exacerbated supply concerns, with Iran indicating a shift to a “fully offensive” military stance amid the deteriorating diplomatic context.

Notably, U.S. President Donald Trump has emphasized control over the Strait of Hormuz, stating that it remains open for traffic while positioning the U.S. response as economically and militarily pressuring Iran. However, Iran’s strong pushback, including characterizations of Trump as ‘deluded’, underscores the risk of continued escalations. Analysts are increasingly skeptical about the resumption of oil tanker traffic through this pivotal route, particularly as both U.S. and Israeli strikes on Iranian positions contribute to a more volatile environment. This has diminished hopes for peace talks and increased the likelihood of long-term supply disruptions.

In terms of market forecasts, investment banks are projecting significant price increases if disruptions persist. JPMorgan suggests that each additional month of disruptions could elevate Brent prices by $7 to $8, estimating a possibility of reaching an average of $114 per barrel over three months. Conversely, Goldman Sachs predicts that prolonged disturbances could push prices even higher, potentially hitting $120 per barrel, despite an expectation that tensions will eventually subside. The bank projects Brent to average $80 in Q4 and $75 next year, while highlighting the substantial risks posed by ongoing geopolitical uncertainties in critical oil transit areas.

Source: The Economic Times

(Expert Note: This report was prepared by the Wealthova team.)