Brent crude settled near $101 a barrel after Iran vowed it was ready for a more intense war following renewed hostilities across the Middle East, raising fears of deeper unrest across the Strait of Hormuz.
Global benchmark crude jumped 3.4% on Wednesday to close above $100 a barrel for the first time since July. West Texas Intermediate crude traded above $96. Iran has no intention of backing down in the face of a US naval blockade and will escalate its attacks if the United States continues to target its territory, according to a senior official in Tehran.
The renewed fighting last week ended a period of relative calm and drove up oil and natural gas prices. US President Donald Trump has said the war will not end until after the midterm elections in November, and that a significant drop in gasoline prices is unlikely before then, suggesting little prospect of de-escalation in the near term in the conflict, which is now in its seventh month.
The United States is attempting to cripple Iran's economy through a naval blockade that has drastically reduced its oil exports, along with threats to sanction governments and companies that do not sever ties with Tehran. The Iranian official acknowledged the growing economic pain but said the leadership believes it has no choice but to continue fighting until it is confident that Washington will be extremely wary of launching another attack.
White House advisers, including Vice President J.D. Vance, privately raised with Trump the possibility that a war with Iran could last for the remainder of his term, according to The Wall Street Journal, citing U.S. officials. Such a scenario would strain U.S. military resources and increase the risk of prolonged disruptions to energy supplies from the Middle East.
Protracted conflict pushes energy prices even higher
Fears of a protracted conflict have helped drive up energy prices. Brent crude has risen by about 70% this year, although the global benchmark remains below its wartime peak of $126 a barrel reached in April. This is partly due to the continued flow of some crude oil out of the Arabian Gulf. Refined products, such as diesel, have seen even greater gains in 2026, reflecting supply risks stemming from the Middle East conflict and the Russian-Ukrainian war.
Warren Patterson, head of commodities strategy at ING Group NV, said that rising oil prices would be a concern ahead of the midterm elections. He added: For prices to rise significantly, we would need the recent escalation to translate into renewed disruptions to flows through the Strait of Hormuz.
Renewed Chinese buying has contributed to increased scarcity in the global oil market, although smaller refineries in the country are under pressure from higher prices and may have to reduce operating rates in the coming weeks, which could curb demand in the world's largest crude importer.
Approximately 11 million barrels pass through the Strait of Hormuz daily.
Before the war, about one-fifth of the world's oil and liquefied natural gas passed through the Strait of Hormuz. While some crude still leaves the Arabian Gulf, often on tankers that have switched off their transponders to avoid detection, the ships face a constant threat of attack.
U.S. Energy Secretary Chris Wright told Bloomberg that slightly less than 11 million barrels per day of crude oil and petroleum products pass through the Strait of Hormuz. He also offered a more optimistic assessment than Trump regarding gasoline prices, saying they will decline in the coming weeks as efforts to increase U.S. refining capacity accelerate.
US retail gasoline prices hit a record high on Labor Day this week, posing one of the biggest political threats to Trump's fellow Republicans ahead of the midterm elections.
Diesel prices have also risen to a record high, while U.S. inventories of industrial fuel are expected to fall this month to their lowest level in more than two decades, according to the Energy Information Administration.
Brent crude for November settlement settled at $101.04 a barrel at 12:05 p.m. Singapore time. West Texas Intermediate crude for October delivery was little changed at $96.13 a barrel.
