Oil Nears $100 as Gulf Supply Risks Grow After Hormuz Traffic Slows

Oil prices moved closer to $100 a barrel on Tuesday as renewed U.S.-Iran tensions increased the risk of further disruption to crude shipments from the Gulf.

Brent crude futures rose to $97.49 a barrel, while West Texas Intermediate climbed to $92.92. The latest move followed warnings from Iran that it could retaliate against further U.S. attacks on its assets, adding another layer of risk to an already disrupted energy market.

The market is particularly focused on the Strait of Hormuz, a major route for global energy shipments. Traffic through the waterway slowed at the beginning of the week as tensions escalated.

The disruption is already visible in regional export volumes.

Crude shipments from Middle Eastern producers have fallen to about 11 million barrels per day from roughly 18 million bpd before the war began, according to Argus data cited by Makon Financials

However, the reduction has not translated into an immediate move above $100 because some oil is still getting through Hormuz, and exporters have found alternative ways to move cargoes.

Average flows through the strait are currently estimated at around 4 million to 5 million bpd. Gulf producers are also using alternative export routes and ship-to-ship transfers outside the waterway to reduce the impact of the disruption.

That distinction matters for the oil market. The problem is not that Gulf exports have stopped completely. The bigger question is how much crude can continue reaching buyers if the security situation deteriorates.

Why Brent Has Stayed Below $100

The physical oil market is showing signs of much tighter supply than the headline Brent price suggests.

Reuters reported that Dubai and Oman spot premiums have risen sharply, with cargoes for November trading at substantial premiums. Oman futures were above $104 a barrel on Monday, while cash Dubai was around $105.

Yet Brent remains below $100 because several sources of supply and weaker demand are cushioning the disruption.

The United States, Canada, and Guyana are expected to add a combined 1.4 million bpd of production this year. Russian crude exports have also remained relatively strong despite damage to its refining system.

Demand has weakened as well. Rystad estimates demand destruction in petrochemicals and transportation fuels at about 3.5 million bpd in the third quarter. China accounts for more than half of that decline, with its seaborne crude purchases falling sharply from earlier levels.

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China’s large crude reserves are another buffer for the market. Kpler estimates its reserves at about 1.17 billion barrels, giving Beijing additional capacity to absorb periods of supply disruption.

Diesel prices have risen sharply image two

The bigger pressure point may be refined products rather than crude itself.

Diesel prices have risen sharply as refinery disruptions in the Middle East and elsewhere restrict supplies. Reuters reported that physical oil markets are already pricing crude and refined products above the headline Brent benchmark, with diesel showing particularly severe tightness.

That creates a different risk for consumers and businesses. Even if Brent stays below $100, expensive diesel can raise transportation, freight, and industrial costs and feed into broader inflation.

For Gulf economies, the situation is also complicated. Higher crude prices can support export revenues, but prolonged disruption to shipping raises insurance, logistics, and trade costs.

The UAE has been developing alternative trade and energy routes to reduce its exposure to Hormuz-related disruptions, according to a Reuters report published on Monday. That is part of a broader effort by economies to maintain exports when the main maritime route becomes unreliable.

What Investors Are Watching

Actual oil flows through Hormuz

This is arguably more important than the headline oil price. If the current 4–5 million bpd average deteriorates significantly, the market will have fewer barrels available to offset the disruption. A sustained recovery in traffic, on the other hand, would remove some of the geopolitical premium currently built into crude prices.

The gap between Brent and physical crude prices

The difference between futures prices and physical benchmarks is becoming important. Cash Dubai and Oman prices are already above $100, showing that buyers of immediately available barrels are paying considerably more than the headline Brent price. If that premium persists, it would signal that the physical market is tighter than futures pricing alone suggests.

Diesel availability

Investors are watching refined-product inventories closely because diesel shortages can hurt economies even without another major jump in crude prices. If diesel remains exceptionally expensive while refinery disruptions continue, pressure on transportation and industrial costs could intensify.

Whether alternative supply can keep filling the gap

Additional production from the U.S., Canada, and Guyana is helping replace some lost Gulf barrels. Investors will want to see whether those supplies can continue offsetting disruptions if Middle Eastern exports remain depressed through the end of the year.

How long does the disruption last

This is the market’s biggest variable. Goldman Sachs has already raised its assumption that Middle East shipping disruptions could continue into 2027, while ANZ expects Persian Gulf supply to remain constrained through the rest of 2026.

If shipping normalizes, Brent could retreat as the geopolitical premium unwinds. If disruption becomes prolonged, the combination of lower Gulf exports, tight refined-product markets, and falling inventories could push crude materially higher.

For now, Brent remains below $100, but the physical market is showing signs that the supply problem is more severe than the benchmark price alone suggests.

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MAKON FINANCIALS DESK

Makon Financials Desk, is the dedicated editorial team behind Makon Financials, delivering insights on global financial news, macroeconomic trends, and market movements.