Oil continues to rise as renewed fighting in the Middle East raises fears of protracted conflict

Oil prices extended gains on Tuesday and are hovering at a six-week high amid concerns about escalating tensions in the Middle East after the US and Iran traded blows over the weekend.

International benchmark futures Brent crude oil for November delivery added 1.1% to $97.00 per barrel. US West Texas Intermediate Futures in October increased by 2.1% to $93.43 per barrel.

The US military struck three Iranian oil tankers on Saturday after Iran fired ballistic missiles at two Navy warships. Iran’s Foreign Ministry called the attacks on commercial ships a “war crime” and an act of “economic warfare” in a statement on Saturday.

“This appears to be a major escalation and tensions have risen again,” said David Morrison, senior market analyst at Trade Nation, noting that US Energy Secretary Chris Wright has said it may not be possible to reach an agreement with Iran to prevent it from acquiring nuclear weapons.

Last weekend’s strikes also contributed to gas prices rising to record levels.

Tensions between Washington and Tehran continued to rise. “Strike our assets and you get hit,” Iranian parliament speaker Mohammad Bagher Ghalibaf wrote in a post on X on Monday.

This was in response to Defense Secretary Pete Hegseth, who wrote that the US would “destroy (and sink)” Iranian oil tankers if Iran opened fire on American vessels.

Goldman Sachs on Monday raised its Brent and WTI price forecasts by $5 to $85 and $80 a barrel, respectively, for December 2026, and to $80 and $75 a barrel, respectively, for 2027.

The bank expects oil supply disruptions in the Middle East to continue into 2027, with production gradually recovering by the second half of 2027. “Markets are increasingly pricing in protracted conflict in the Middle East,” Goldman said, adding that rates for crude tanker shipments from the Persian Gulf to China in the second quarter of 2027 now take into account supply disruptions continuing during that period.

President Trump said in a message in the US on Monday that “oil prices will plummet… when we win the war with Iran.”

— CNBC Greg Iacurci contributed to the report.