NEW YORK (Realist English). The global oil market remains in turmoil amid escalating conflict in the Middle East. At the close of trading on 29 July, Brent surged 7.91% to $90.74 a barrel, while WTI rose 6.56% to $84.46 – the sharpest one‑day jump in more than two weeks.
However, on 30 July, prices corrected: Brent fell 1.42% to $89.45, and WTI dropped 0.66% to $83.90.
Geopolitical driver: war expands
The rally was triggered by a new wave of military action. On 29 July, the US and Saudi Arabia launched joint airstrikes against Iran‑backed militias in Iraq – the first time since the start of the conflict that Riyadh officially joined American bombings. The strikes followed Iran’s attack on a US base in Jordan and the shelling of three oil tankers in the Strait of Hormuz.
US President Donald Trump, in a Fox News interview, promised to “hit Iran hard.” “The conflict looks protracted, possibly for months, as the parties cannot break the deadlock over the Strait of Hormuz,” Bloomberg quoted current and former US, Iranian and European officials as saying.
The Strait of Hormuz, through which about 20% of the world’s oil and gas passed before the war, has remained largely blocked since February. Iran has rejected Oman’s proposal for joint regional management of the strait.
Red Sea – a new front
The conflict is spreading to the Red Sea. Iran‑backed Yemeni Houthis have declared a naval blockade of Saudi Arabia and are considering imposing fees for commercial vessels passing through the southern Red Sea.
Nevertheless, preliminary data show that on 29 July, 39 cargo ships passed through the Bab el‑Mandeb Strait into the Red Sea – the highest number since 19 July. However, only a handful of vessels transited the Strait of Hormuz during the day.
Combined exports from the Persian Gulf and Saudi Arabia’s western coast fell to 6.2 million barrels per day this week – less than half the wartime peak of 13.4 million bpd and well below pre‑war levels of 20 million bpd, according to analytics firm Kpler.
US inventories plummet to multi‑year lows
Price gains were supported by data from the US Energy Information Administration (EIA): commercial crude inventories fell by 7.2 million barrels last week to 404.5 million barrels – the lowest level since 2018. Analysts had expected a decline of just 1.3 million barrels.
Stocks in the US Strategic Petroleum Reserve have fallen for 18 consecutive weeks, hitting their lowest level since 1983.
OPEC+ to pause output hikes
Additional support for prices comes from expectations of an OPEC+ decision. According to Reuters, the cartel and its allies are likely to pause planned output increases for three months starting in October, after completing the restoration of voluntary cuts.
Seven OPEC+ countries were due to increase output by 188,000 barrels per day in September.
Views of Western experts
Analysts agree that the Middle East conflict remains the primary driver of volatility.
Suvro Sarkar, head of energy analysis at DBS Bank: “Brent will continue to oscillate sharply in the $80-100 per barrel range in the near term, as the Middle East conflict alternately subsides and escalates. A series of intermittent negotiations means that a full unblocking of the Strait of Hormuz is not achieved, and even in a de‑escalation scenario, prices could hold above **$80 per barrel.”
John Kilduff, partner at Again Capital: “The market is quickly pricing in the risk of supply disruptions in the region.”
Bart Melek, head of commodity strategy at TD Securities: “Markets jumped the gun on hopes for a return to peace, especially given Iran’s insistence on controlling the strait under any potential agreement. We still see shrinking flows and a global tightening of the energy market, which supports further price gains.”
Analysts at ING: “The resurgence of [price] strength comes after the US reported repelling a sudden attack on its troops. Recent events undermine expectations of a quick de‑escalation in the region.”
JPMorgan estimates that each additional month of supply disruption could add $7-8 to Brent prices. A three‑month disruption could push the average monthly Brent price to roughly $114 per barrel.
Goldman Sachs maintains its baseline forecast: Brent at $80 in Q4 2026 and $75 in 2027. However, if disruptions in the Strait of Hormuz persist, Brent could exceed $120 per barrel.
The market is frozen in uncertainty. As Reuters notes, “neither full‑scale war nor peace is breaking out in the Middle East, trapping energy markets in an uncomfortable suspended state from which it will be difficult to escape.”
Importers are beginning to avoid supplies from a region that before the war accounted for a fifth of global oil and LNG exports. There are no signs of an imminent resolution – meaning oil prices will continue to react to every new outbreak of violence in the Persian Gulf and the Red Sea.
