Brent nears a four-week high: how high can oil go from here?

Oil prices held close to four-week highs on Thursday as traders weighed persistent disruption around the Strait of Hormuz against a surprise build in US crude inventories, leaving Brent above $91 a barrel and WTI near $86.

Brent crude futures were around $91.87 in early trade, while front-month WTI was near $85.81.

Both benchmarks had risen for four consecutive sessions through Wednesday, when Brent settled at $91.62 and WTI at $85.83.

The rally has been driven less by stronger demand than by the risk that the US-Iran confrontation could further restrict one of the world’s most important energy corridors.

Hormuz keeps a floor under crude

The Strait of Hormuz remains the dominant driver for oil.

Washington says the waterway is open, while Tehran maintains that restrictions remain in place, and many shipowners continue to avoid the route because of security concerns.

The latest escalation came as the UAE suspended trade and financial dealings with Iran after accusing Tehran of renewed missile attacks, a charge Iran has denied.

The move adds another layer of uncertainty around Gulf commerce and reduces hopes for a quick diplomatic route out of the standoff.

That matters because roughly a fifth of global oil consumption normally passes through Hormuz. Even with alternative pipelines, ship-to-ship transfers and rerouted cargoes helping to soften the disruption, the cost of moving Gulf crude has risen sharply.

The Financial Times reported that tanker demand has surged, with spot earnings for some supertankers climbing above $550,000 a day.

US inventories cap the rally

The bullish geopolitical story is being offset by signs that physical supply is not tightening as quickly as feared.

US commercial crude inventories rose by 4.4 million barrels last week to 428.8 million, according to the Energy Information Administration, versus expectations for a decline.

Gasoline stocks also increased, while US crude production averaged 13.8 million barrels a day. Refinery utilisation climbed to 97.2%, showing plants are running hard despite the broader supply concerns.

TradeStation’s David Russell sees the inventory build and softer gasoline demand as evidence that US supply conditions are becoming less strained.

Ritterbusch analysts point to low distillate stocks as a counterweight, with diesel and other middle-distillate supplies still well below seasonal norms.

That divergence helps explain why crude has held firm without breaking decisively higher.

Brent above $90 keeps inflation risk alive

Brent’s ability to stay above $90 matters well beyond energy markets.

Expensive crude can feed directly into fuel, freight and manufacturing costs, complicating the inflation outlook just as investors debate whether the Federal Reserve may need to tighten policy again.

For now, the market is paying a sizeable geopolitical premium, but not pricing a full-scale supply shock.

The next move will depend on whether shipping through Hormuz deteriorates further or whether rising inventories and alternative export routes continue to absorb the disruption.