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Why $100 Oil Is Hard to Kill
By Tsvetana Paraskova - Oct 06, 2026, 7:00 PM CDT
- Brent remains above $100 despite recovering Middle East crude flows, as record freight costs, war-risk premiums and inefficient shipping workarounds keep delivered oil expensive.
- The wider oil market remains extremely tight, with depleted inventories, constrained Middle Eastern, Russian and Chinese fuel exports, and a worsening diesel shortage ahead of winter.
- Geopolitical risks remain heavily skewed to the upside, as another major supply disruption could trigger a fresh price spike with little spare inventory available to cushion the blow.
Brent Crude oil prices have held above $100 per barrel for most of the past month despite numerous reports and figures put out in recent weeks by tanker-tracking services and investment banks that crude oil flows from the Strait of Hormuz have recovered, and even exceeded, pre-war levels.
But if so much crude is leaving the Middle East again, why do Brent prices continue to hover around the $100 a barrel mark, up from $60 before the war?
The Perfect Storm
Because crude oil flows returning to pre-war levels does not mean that the market has returned to normal. Far from it. The price of getting the oil out of the Middle East is astronomically high, with freight rates at record highs. War risk premiums have jumped as tankers continue to be attacked in the Strait of Hormuz. Gulf producers have found workarounds to crude flows with alternative routes, which are less efficient, cost buyers more, and take additional weeks to bring crude supply to refiners.
Refiners, for their part, are scrambling to keep processing rates high to seize the record-high refining margins and produce more diesel, which remains the most stressed barrel of oil.
Fuel exports from the Middle East are still limited, Russia’s are non-existent because of Moscow’s ban on diesel shipments, and China is once again protecting domestic supply and curbing fuel flows overseas.
In addition, global inventories have crashed this year as the immediate relief to peak Strait of Hormuz disruptions in April and May was to draw down from crude and fuel stocks. Inventories, therefore, are so thin that they may not be able to offset another escalation in the U.S.-Iran war.
These are only the operational issues the global markets face ahead of the winter diesel peak demand season.
The geopolitical situation is the biggest unknown for oil prices going forward, and it doesn’t look like the war is ending soon. Instead, the market fears fresh escalations either before or after the U.S. midterm elections in early November, which could threaten the recovery of oil flows from the Strait of Hormuz. Related: Gulf Storm Threat Could Put 3 Million Bpd of Refining Capacity at Risk
With markets depleted of sizeable cushions to absorb new shocks, crude oil prices continue to price in an elevated war risk premium, keeping Brent above $100 per barrel since early September.
“A sustained move lower in Brent requires broader normalisation: improving crude supply, recovering product exports and reduced political and financial risks to shipping,” Ole Hansen, Head of Commodity Strategy at Saxo Bank, said last week, commenting on the prospect of stocks release.
The G7 group on Friday announced the release of 100 million of crude oil and diesel stocks. After an initial knee-jerk reaction lower, Brent remains at above $100 per barrel in Asian trade on Tuesday.
The effect of the release announcement on oil prices seems to have faded, also because the market is not really certain how many of the 100 million barrels would be really “new”, or if they are the remainder of the IEA’s pledge to release 425 million barrels months ago, part of which were never actually released, Bjarne Schieldrop, chief analyst commodities at SEB Bank, said on Monday.
The analyst also noted that while the Brent front-month futures price is about $100 per barrel, the price of North Sea’s Oseberg and Fortis crudes is actually about $140 a barrel.
The Upside Risks
Key unknowns are keeping the front-month Brent futures at $100, according to SEB.
“Will Iran initiate fresh attacks before the US midterm elections? Will the US attack Iran after the elections? Will the US be able to keep the SoH close to open at 17.5 mb/d? Will the Houthis re-attack the Saudi east-west pipeline and ships trying to traverse the Bab-el Mandeb Strait as the Saudi-backed Yemen government tries to retake areas along the Red Sea recently taken by the Houthis?,” Schieldrop says, also asking, “How far will this have to go before China finally decides to step in as a peacemaker in ME negotiations?”
Despite claims of return to pre-war levels of Middle East crude oil exports, the risk to oil prices is currently tilted to the upside amid the potential of escalation, record-high freight and war premium tanker rates, very low global inventory, and the diesel crisis compounded by the lack of exports from the Middle East and Russia.
“The market is pricing not only how much crude is being loaded, but also whether these barrels can be delivered safely, reliably, and at low cost,” Xuyi Zhao, senior oil analyst at Guotai Junan Futures, told Bloomberg.
The higher cost of getting crude to refiners and low inventories unable to offset another near-term disruption set the stage for a new price spike if another crude supply route in the Middle East is attacked, as was the case with Saudi Arabia’s East-West pipeline to the Red Sea last month.
Saudi Aramco’s CEO Amin Nasser said earlier this week, “With precious little else the world can turn to, the supply resilience cushion is scarily thin.”
“Emergency reserves might buy us a winter. They cannot fix long-term supply,” Nasser said at the 2026 Energy Intelligence Forum in London on Monday.
“Until Hormuz fully re-opens and confidence returns, the pressure at both ends of the barrel will intensify.”
By Tsvetana Paraskova for Oilprice.com
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Tsvetana Paraskova
What I Cover Tsvetana Paraskova is an energy and commodities journalist who has contributed to Oilprice.com for nearly a decade, covering global energy markets, commodities,…
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