The escalation of the conflict in the Middle East is once again bringing oil prices to the forefront. At the moment, Brent is trading around $97 per barrel, but in my estimation, this is far from the limit. The key scenario currently being built into the model is the United States transitioning from a negotiation process to military pressure on Tehran. If this happens, we could very well see a rapid move toward the $120 per barrel mark.
The failure of diplomacy as the main trigger
The market is in a state of heightened nervousness. The U.S. administration, judging by recent statements, is betting on military strikes, sanctions, and a naval blockade that has effectively paralyzed Iranian exports and imports. This is not just rhetoric—there are concrete actions behind it that are radically changing the logistics of black gold supplies.
Iran, for its part, is not about to back down. On Sunday, the country's Supreme National Security Council proposed new measures that provide for the creation of a no-shipping zone in the Persian and Oman Gulfs, expanding restrictions far beyond the Strait of Hormuz. Tehran is clearly looking for ways to escalate the situation to strengthen its negotiating position.
In response to this, Iran and Oman resumed negotiations on the Hormuz corridor, which last month somewhat cooled the enthusiasm of traders. However, the open question remains: will Washington agree to such a compromise? Judging by the current dynamics, unlikely.
Brent near the $100 mark: what next?
On Monday, Brent rose to nearly $98 per barrel—the highest level since late July. The impetus came from U.S. strikes on three Iranian tankers, followed by an attack on Saudi Aramco facilities in Jizan. These are no longer just threats, but real actions that directly affect physical supply volumes.
The situation is compounded by fundamental factors. Oil inventories outside China have sharply declined—by more than 400 million barrels since the start of the conflict. Commodity funds are shifting to aggressive bullish bets, while reserves are approaching a critical level. In the U.S., diesel prices have already hit an all-time high, and the gap with crude oil prices has exceeded $100 per barrel—a clear sign of an impending shortage.
Analysts at the International Crisis Group believe that Tehran is betting on managed escalation rather than a full-scale war. However, the main threat right now is miscalculation, not initial intent. Any accidental attack on critical infrastructure could trigger uncontrolled price growth.
My comment: The oil market is at a bifurcation point. The $120 per barrel scenario is becoming increasingly realistic, and this will inevitably impact all risky assets, including cryptocurrencies. Investors should prepare for heightened volatility and hedge risks associated with energy commodities, as their influence on global liquidity will only intensify.