Oil Prices Set to End Week Above $100 as Middle East Supply Risks Intensify

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Oil Prices are heading toward their strongest weekly performance in months as escalating attacks across key Middle East shipping routes raise fears that crude supply disruptions could last longer than previously expected. Brent crude futures climbed to $108.44 a barrel, while U.S. West Texas Intermediate (WTI) reached $103.17 on Friday.

Both major benchmarks are on track to finish the week above $100 for the first time since mid-May. The latest rally comes after oil prices jumped more than 6% on Thursday, pushing weekly gains close to 13%—their steepest increase since the week ended July 17.

The market is now facing a combination of risks involving the Strait of Hormuz, the Red Sea, Saudi energy infrastructure, tanker attacks and disruptions to refining capacity. At the same time, investors are closely watching China, the world’s largest crude importer, because sustained Chinese buying could determine whether the current rally extends toward $120 or eventually loses momentum.

Why Oil Prices Are Rising Above $100 Again

The latest surge in oil prices is primarily being driven by concerns over physical supply rather than simply financial market speculation. Several important shipping and production routes in the Middle East are facing growing security risks.

The Strait of Hormuz remains at the centre of the problem. Although meaningful volumes of oil are still moving through the strategic waterway, flows remain significantly below pre-war levels. That means the global market is receiving less crude through one of its most important energy corridors.

The situation has become more complicated because the risks are no longer limited to the Gulf. Iran-aligned Houthis in Yemen have intensified activity around the Red Sea, while attacks on Saudi energy facilities have raised concerns about the security of alternative export routes.

This creates a wider supply-risk premium in crude prices. Traders do not need all oil shipments to stop for prices to rise sharply. The possibility that disruptions could become larger or last for months can be enough to push buyers and refiners to secure supplies at higher prices.

Brent Crude Heads for Its Biggest Weekly Gain in Months

Brent crude futures rose 81 cents, or 0.8%, to $108.44 a barrel by 0345 GMT on Friday. WTI gained 69 cents, or 0.7%, to $103.17.

The two benchmarks had already jumped more than 6% on Thursday. On a weekly basis, both were trading almost 13% higher, putting oil on track for its largest weekly increase since July.

Red Sea Attacks Add a New Layer of Risk

One of the biggest developments this week is the growing threat to Red Sea shipping. Iran-aligned Houthis seized control of Yemen’s port of Mocha on Thursday, creating additional uncertainty for vessels operating in the region.

The Red Sea is important because it provides an alternative route for some energy shipments that might otherwise face the risks associated with the Strait of Hormuz. If both routes become increasingly dangerous, the global oil market could lose some of its ability to reroute supplies.

Attacks on Saudi energy facilities are particularly significant because Saudi Arabia is one of the world’s most important oil producers and exporters. Any prolonged damage to infrastructure could reduce available supply or complicate transportation.

The result is a broader regional risk rather than a problem confined to a single waterway.

Strait of Hormuz Remains the Market’s Biggest Concern

The Strait of Hormuz continues to be the most closely watched chokepoint in the current oil crisis. Before the conflict, the waterway handled a substantial share of global oil and gas shipments.

Current flows remain below pre-war levels. This matters because even partial restrictions can create significant problems for refiners and traders that depend on predictable deliveries.

ING analysts said that meaningful volumes were still moving through the strait, but the fact that flows remain below previous levels demonstrates how fragile the market has become.

The key question is therefore not simply whether the Strait of Hormuz is open. Traders are asking how much oil can safely move through it, how reliable those shipments are and whether the disruption will continue.

U.S. Diesel Prices Cross $6 for the First Time

The impact of the supply disruption is already visible in fuel markets. The U.S. national average diesel price moved above $6 a gallon for the first time ever on Thursday, according to price tracker GasBuddy.

The increase reflects the combined effect of Middle East oil disruptions and Ukrainian attacks on Russian refineries. Refinery problems can be particularly damaging because crude oil must be processed into products such as diesel, gasoline and jet fuel before consumers can use it.

A shortage of refined products can therefore develop even when global crude supplies have not completely disappeared.

Why the $120 Oil Price Level Is Now in Focus

With Brent already above $100 and WTI above $103, analysts are increasingly discussing what happens if the conflict continues to spread.

IG analyst Tony Sycamore said the market could see WTI retest its early-March high of $119.48 if the conflict continues expanding and Iran maintains its willingness to prolong the confrontation.

The important distinction is between a temporary geopolitical spike and a structural supply shock. If shipping routes reopen and production flows improve, oil prices could retreat quickly. But if disruptions persist across both Gulf and Red Sea routes, the market could enter a much tighter pricing environment.

China Could Decide How Far the Oil Rally Goes

China is emerging as one of the most important variables for oil prices. As the world’s largest crude importer, its purchasing decisions can have a major effect on global physical demand.

If Chinese refiners continue buying large volumes of crude while supplies from the Middle East remain restricted, competition for available barrels could intensify.

That would potentially amplify the effect of the supply disruption and push benchmark prices higher.

On the other hand, weaker Chinese purchases could reduce some of the pressure on the global physical market. This is why analysts are watching actual cargo movements and refinery demand rather than relying only on geopolitical headlines.

OPEC Cuts Its 2026 Demand Growth Forecast Again

There is also an important counterweight to the bullish supply story. OPEC has lowered its forecast for global oil demand growth in 2026 to 380,000 barrels per day.

This represents the fifth consecutive downward revision to its demand-growth estimate.

Slower demand growth can limit how far prices rise because consumers, industries and refiners may respond to expensive crude by reducing consumption or changing purchasing patterns.

OPEC oil output also declined by approximately 640,000 barrels per day in August, according to a Reuters survey. Lower production combined with geopolitical disruption creates a tighter supply picture, although weaker demand expectations provide some offset.

The Oil Market Is Now Watching Physical Flows

The next stage of the rally may depend less on political statements and more on what happens to actual barrels of crude.

Priyanka Sachdeva, an analyst at Phillip Nova, said the next move in oil prices will depend heavily on whether physical flows improve or deteriorate further.

This is an important shift for traders. Headlines can move oil prices rapidly, but sustained price increases generally require a genuine tightening of the physical market.

If tankers continue moving, alternative routes remain available and inventories prove sufficient, the market could eventually calm down. If shipping disruptions intensify and fewer barrels reach major consuming regions, prices could rise considerably further.

What Could Push Oil Prices Higher?

• Longer Strait of Hormuz disruptions: Reduced flows through the key waterway could tighten global supply.
• More attacks on tankers: Shipping companies may avoid dangerous routes, increasing transportation costs and delays.
• Red Sea escalation: Wider attacks could restrict alternative export and shipping routes.
• Damage to Saudi energy infrastructure: Extended outages could remove additional supply from the market.
• Strong Chinese buying: Higher Chinese imports could increase competition for available crude.
• Russian refinery disruptions: Further attacks could tighten global refined-product markets.

What Could Stop Oil From Reaching $120?

The rally is not guaranteed to continue indefinitely. Several factors could eventually reduce the pressure on prices.

• Improvement in Strait of Hormuz shipping flows.
• A reduction in attacks across the Middle East.
• Greater use of alternative export routes.
• Weaker Chinese crude demand.
• Slower global economic growth.
• Higher fuel prices causing demand destruction.
• Recovery in refinery operations and refined-product supply.

The market therefore faces two very different possibilities: stabilization below $120 or another major supply shock that pushes crude into a new price range.

Why $100 Oil Matters for the Global Economy

Oil prices above $100 are economically important because crude is a major input for transportation, manufacturing, chemicals, aviation, logistics and many consumer products.

When crude becomes significantly more expensive, the effects can spread through the economy. Airlines may face higher fuel costs, trucking companies may pay more for diesel, manufacturers can face higher energy bills and consumers may eventually see more expensive transportation and goods.

For oil-importing countries, higher crude prices can also increase the import bill and put pressure on inflation and currencies.

The longer prices remain above $100, the more important these secondary effects become.

Oil Prices Enter a Critical Phase

The current oil rally is different from a normal short-term price movement because several supply risks are developing simultaneously. The Strait of Hormuz remains restricted, Red Sea shipping faces new threats, Saudi energy infrastructure has come under attack and refinery disruptions are affecting refined fuel markets.

At the same time, OPEC expects slower demand growth, which could limit the upside if global consumption weakens.

That leaves the market focused on the balance between disrupted supply and actual demand. If physical oil flows deteriorate further, prices could test $120 and potentially move into a significantly higher range. If flows stabilize, the recent rally could lose momentum despite continuing geopolitical tensions.

What Traders Will Watch Next

• Daily crude shipments through the Strait of Hormuz.
• Security conditions around the Red Sea and Yemen.
• Further attacks on tankers or energy infrastructure.
• Saudi and other Gulf producers’ export volumes.
• Chinese crude import and refinery activity.
• U.S. diesel and gasoline prices.
• Russian refinery operations and exports.
• OPEC production and demand revisions.

Bottom Line

Oil prices are heading toward their first weekly close above $100 in nearly four months as the conflict in the Middle East increasingly threatens multiple energy and shipping routes. Brent at $108.44 and WTI at $103.17 show how quickly geopolitical risk can translate into higher crude prices.

The biggest question now is whether the disruption remains temporary or becomes a prolonged structural shock. China’s buying activity, the reliability of Strait of Hormuz shipments and the security of Red Sea routes will be critical indicators.

For the global economy, the return of oil above $100 is more than a psychological milestone. If prices remain elevated for an extended period, higher fuel costs could feed into inflation, corporate margins, transportation expenses and household budgets. The market is therefore entering a crucial period in which actual physical oil flows—not just headlines—will determine the next major direction for crude prices.