Brent: Supply shock drives sustained price strength – Commerzbank

Commerzbank analysts highlight that Brent crude Oil has surged above USD100 as Middle East conflict triggers major supply disruptions. The International Energy Agency estimates an unprecedented hit to global Oil supply and exports, while the US Energy Information Administration now sees retail gasoline prices only returning below pre-conflict levels by late 2027, reinforcing concerns about prolonged supply-led inflation.

War-driven disruption underpins Oil rally

"The main theme overnight was risk-off, as oil prices continued to rise amid signs of worsening supply disruptions. Brent crude oil closed above USD100 for the first time since August 2022."

"President Trump and Iran’s new supreme leader, Mojtaba Khamenei, both struck defiant tones, which caused a further spike in oil prices. President Trump wrote in a social media post that stopping Iran from having nuclear weapons is “of far greater interest and importance to me, as President”."

"The International Energy Agency (IEA) said the “the war in the Middle East is creating the largest supply disruption in the history of the global oil market”, hitting 7.5% of global supply and an even bigger swath of exports."

"The IEA estimates that the war will slash global oil supply by 8 million barrels a day this month, or almost 250 million barrels in total."

"In its latest Short-Term Energy Outlook, the US Energy Information Administration raised its fuel price forecast. It now expects retail gas prices to only fall below the pre-conflict level of USD2.94 per gallon by the end of 2027, sparking fears of supply-led inflationary pressures."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)