Brent crude breaks $90 amid Gulf supply fears: why $105 may be next

Brent crude broke above $90 a barrel on Monday as renewed fighting between the United States and Iran tightened tanker traffic through the Strait of Hormuz.

The international benchmark rose 3.05% to $90.79, its highest since June 11, after gaining 15.9% last week, while US West Texas Intermediate crude climbed 2.65% to $84.68 a barrel.

The rally followed a ninth consecutive night of US strikes against Iran and Iranian attacks reported by Kuwait and Bahrain.

Hormuz traffic becomes the market’s pressure point

The Strait of Hormuz handles about one-fifth of global oil trade, making the waterway crucial to Gulf exports. Traders are not necessarily pricing a complete closure.

Instead, they face fewer vessels, greater security risks, and uncertainty about how much oil can consistently leave.

Only four vessels crossed on Sunday, down from eight on Saturday, according to LSEG data.

At least three product tankers and one very large crude carrier had entered since Friday to load oil, showing traffic had not stopped but remained constrained.

Washington says it is enforcing a naval blockade on Iranian ports, while Tehran says it is targeting vessels that breach its navigation rules.

A vessel was also reported on fire near Oman early Monday, although the cause had not been verified.

Tight inventories strengthen the $105 case

The surge may prove more durable than earlier geopolitical rallies because stockpiles offer less protection against lost barrels.

Barclays analyst Amarpreet Singh said the coming days would clarify sustainable regional exports under renewed blockades by both sides.

He warned in a note that “oil markets are still too complacent” about the impact on inventories, which Barclays estimates are at their tightest in five years.

Inventories act as the market’s shock absorber.

When storage is comfortable, refiners can replace delayed cargoes with barrels held onshore. When stockpiles are low, a persistent decline in exports can force buyers to compete for prompt supplies, pushing prices higher.

Quantum Strategy strategist David Roche expects declining Gulf exports to leave inventories tight by September, including in the United States.

“Stay long Brent with a target of $95 to $105 a barrel,” Roche said in a Monday note.

The $105 level is a scenario rather than a consensus forecast, but it is not isolated.

Barclays projected an average Brent price of $96 for 2026 in late June and expected a third-quarter supply deficit because production recovery was lagging behind improving shipping flows.

Tanker flows will decide the next move

A sustained rise towards $105 would require Hormuz traffic to remain restricted, Gulf exports to fall and diplomacy to produce little progress.

Damage to tankers, terminals, pipelines or other infrastructure could accelerate the move if refiners begin competing for scarce near-term cargoes.

The counterargument is equally important, as oil can reverse sharply when geopolitical tensions ease.

More tanker crossings, credible negotiations or evidence that exports are normalising could remove part of Brent’s risk premium.