Brent crude closed in on $100 a barrel on Tuesday, holding at its highest level in six weeks, as Iran said an agreement with Oman to manage shipping through the Strait of Hormuz was nearing completion and traders weighed how the US would respond to a weekend of tanker strikes.
Brent traded at $97.11, down marginally on the day but up more than 10 percent over the past month and 46 percent year-over-year, according to Trading Economics data. The benchmark rose nearly 10 percent last week alone as renewed US-Iran fighting raised fears of supply disruption through the strait, which carries roughly 7 million barrels a day of crude and refined products, about a fifth of global consumption.
The Iran-Oman shipping deal
The agreement under negotiation would give Iran, working with Oman, a formal role in managing tanker traffic through the strait. Details have not been published, and traders are watching for specifics before pricing the next move. The prospect of Tehran gaining institutional control over the world’s most important oil chokepoint, even a shared one, is what pushed Brent to $97.5 on Monday.
Oman’s role is the notable part. Muscat has historically positioned itself as a neutral broker between Tehran and Washington, hosting back-channel talks and keeping its own waters open. An arrangement that formalizes Iranian oversight of shipping schedules, even jointly with Oman, would mark a shift in how the strait is governed and give Tehran leverage over every barrel that exits the Gulf.
Over the weekend, both sides escalated. The US struck three Iranian tankers, and Iran threatened to declare a restricted maritime zone beyond the Strait of Hormuz. Attacks also hit Saudi Aramco’s facilities in Jazan near the Red Sea again on Monday, though the damage was reported as limited.
Energy Secretary Chris Wright said Washington would maintain its naval presence and blockade in the region.
Why $100 has not arrived yet
Two factors have capped the rally so far. Major economies are tapping strategic inventories to tame higher import costs. The US Strategic Petroleum Reserve has fallen to less than 290 million barrels, its lowest level since 1982, which limits how much more Washington can release without undermining the reserve’s purpose. China, meanwhile, has significantly cut crude imports and refinery runs, softening demand from the world’s largest importer at exactly the moment supply fears would normally send prices vertical.
Those buffers are finite. If the Iran-Oman deal formalizes Iranian control over shipping schedules, or if the US responds to the tanker strikes with tighter blockade enforcement, the remaining cushion between $97 and $100 could disappear quickly. Options markets are already pricing a meaningful chance of Brent crossing $100 within the quarter, and Trading Economics models put the benchmark at $97.41 by end of quarter with a rise toward $113 over twelve months.
| Benchmark | Price (Sep 8) | Month | Year |
|---|---|---|---|
| Brent crude | $97.11 | +10.7% | +46.3% |
| WTI crude | $92.36 | +12.5% | +47.5% |
| Natural gas | $2.95 | +5.5% | -5.4% |
| Gasoline | $3.22 | +2.7% | +61.1% |
The inflation problem this creates
Oil at these levels feeds directly into the inflation data that central banks will read this week. The European Central Bank decides on rates Thursday with eurozone inflation already at 3.3 percent, and markets price a 96 percent chance of a 25 basis point hike. In the US, prediction markets put the odds of a Federal Reserve hike on September 16 at 52 percent, a remarkable setup for a bank that spent most of the year signaling cuts.
Energy is the most direct channel from geopolitics to household prices. US gasoline averages $4.15 a gallon after the latest round of strikes, according to NYT reporting, and every $10 move in Brent flows through to fuel, freight and food costs within weeks. Shipping insurance rates for Gulf routes have climbed alongside the benchmark, adding a second cost layer for anything moving through the region.
A Hormuz closure scenario, even partial, would test the SPR’s depleted reserves and China’s demand discipline at the same time. Roughly 7 million barrels a day would need to find alternative routes or wait, and no combination of pipelines through Saudi Arabia and the UAE can replace more than a fraction of that.
Traders’ next checkpoints are the publication of the Iran-Oman deal terms, the US response to the tanker strikes, and Thursday’s ECB decision. Until one of those lands, Brent looks set to keep hovering just under the psychological line that markets and headlines both treat as a threshold.
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