Key Takeaways:
Crude's return to triple digits rests on a supply hole that keeps getting deeper: barrels knocked offline across the Middle East climbed to 6.7 million a day in August from 5.0 million in July, and the U.S. Energy Information Administration now sees that gap persisting until the second quarter of 2027. The agency lifted its 2026 Brent spot forecast almost 5% to roughly $91 a barrel on that basis.
"Brent breaking above $100 is a major psychological milestone for markets, but the bigger concern is what this means for inflation," Lukman Otunuga, market research head at broker FXTM, said.
The EIA also raised its 2026 target for New York-traded West Texas Intermediate futures by nearly 5% to $84.65 a barrel, and said global oil inventories have fallen by 400 million barrels this year and will keep declining through year-end. Brent settled 3.3% higher at $101.21 on Sept 9, its first close above $100 since a single session in late July, while WTI ended up 3.2% at $96.05. Both benchmarks reached their highest closing levels since May 22. On the morning of Sept 10, Brent added 0.65% to $101.89 and WTI rose 1.02% to $97.04.
The escalation behind the move was military. The U.S. military said it destroyed five Iranian tankers on Sept 8 in response to attempted missile attacks on a Navy warship, and Tehran struck back at U.S. ships and a base in Jordan. Attacks by Yemen's Iran-backed Houthis set oil facilities ablaze in Saudi Arabia, including a Saudi Aramco refinery north of Abha, and targeted the Red Sea route Riyadh has used to move barrels around the throttled Strait of Hormuz.
The 1.7 million barrel-a-day increase in outages between July and August is the number that matters, because it lands on a market with almost no spare cushion. The EIA's 400-million-barrel drawdown this year is roughly 1.1 million barrels a day of lost stock, and the agency expects that drain to continue rather than reverse. The two figures compound: supply is offline at the same time as the buffer that normally absorbs a disruption is shrinking.
The EIA assumes partial restrictions on Middle East exports stay in place through the end of this year, with production recovering to pre-conflict averages only by the second quarter of 2027. That timeline is the single most important input in the agency's forecast. If the restrictions lift sooner, the $91 Brent assumption is too high; if they harden, it is too low.
Bank of America analysts took a similar view this week, raising their second-half oil price forecast to $83 a barrel "in light of more persistent disruptions to Hormuz" while still expecting shipping through the strait to pick up gradually. They wrote that a continued chokehold on traffic could push prices to $95 to $120 a barrel, and that damage to major energy infrastructure could produce spikes of up to $150. The bank also said a durable deal before the U.S. midterms looks "increasingly unlikely" and "could remain elusive even beyond that."
The cost is already visible at the pump. The average U.S. price for a gallon of regular gasoline reached $4.22 on Sept 9, up nearly 42% from $2.98 before the war began on Feb. 28, according to AAA. Diesel set another all-time high of $5.94 a gallon, up nearly 58% over the same period. Diesel matters more than gasoline for headline inflation because it moves freight, and Bank of America pointed to additional refinery outages in Russia and reduced refining activity elsewhere as drivers of the global distillate squeeze.
Import-dependent economies in Asia and Africa have absorbed the sharpest shocks. Nigeria's diesel price is up more than 90% and gasoline nearly 58% since late February, according to energy tracker Global Petrol Prices. Indonesia's diesel has risen 87% and gasoline 38%; Lebanon's diesel is up 80% and gasoline 46%.
The last time Brent settled above $100 was a single day in late July, and prices have held above $90 since the end of August. Otunuga said a solid close above $100 "confirms this isn't just a headline spike" and opens the door toward $110, though he allowed that momentum could still fade. The distinction between a one-day print and a sustained move is what separates an inflation problem from a headline.
President Donald Trump said Sept 9 that he does not expect oil prices to cool before November's midterm elections, now eight weeks away, but would come down "right after." That leaves the outage trajectory — not diplomacy — as the variable to watch. The EIA's own recovery assumption points to the second quarter of 2027, and every month that passes without a decline in the 6.7 million barrel-a-day figure keeps the $91 forecast, and the $100 handle, in place.
This article is for informational purposes only and does not constitute investment advice.
