Could Middle East Tensions Drive Oil Prices Above $100 per Barrel? Bernstein Weighs In

Oil prices saw an increase on Thursday as Hurricane Milton impacted Florida, raising concerns about possible supply disruptions in the Middle East. By 09:29 ET, the Brent crude contract rose by 1.4%, reaching $77.66 per barrel, while West Texas Intermediate (WTI) futures also climbed 1.4% to $74.27 per barrel.

Over the last two sessions, both contracts dipped by approximately 5%, but they have seen an overall increase of 10% in the past week. The hurricane has made landfall in Florida and, although it has mostly spared the oil infrastructure in the Gulf of Mexico, it has heightened gasoline demand within the state, thereby supporting crude prices.

Traders are also increasingly concerned about the potential escalation of conflicts in the Middle East, especially regarding possible attacks on Iranian oil facilities by Israel. Iran is currently producing around 3.3 million barrels of crude oil daily.

Strategists from Bernstein noted that if domestic refining capacity were to become compromised, more crude oil could be available for export. Conversely, any damage to Iran’s upstream assets could lead to a rise in oil prices. They mentioned that current shipping data indicates stable oil exports from Iran.

The analysts warned that any significant disruption to oil flows in the region could propel crude prices to as high as $100 per barrel. A potential closure of the Strait of Hormuz—an essential shipping route—by Iran could further exacerbate this situation. If prices do hit the $100 mark, they cautioned that demand for oil could begin to decline.

While Bernstein’s analysts do not consider $100 oil their base scenario, they acknowledged that it remains a possibility in the short term. They also suggested that if tensions ease, prices could revert to around $70 per barrel in the near future.