18th August 2026
Brent crude oil has moved back above $91 a barrel, and the question now being asked by businesses, consumers and governments is where does oil go from here?.
The answer depends less on the normal workings of the oil market than it does on geopolitics.
The current US–Iran situation remains unresolved, negotiations appear to have reached an impasse, and uncertainty surrounding oil shipments through the Strait of Hormuz continues to hang over the market.
That makes another move towards $100 a barrel a very real possibility.
It does not mean that $100 is inevitable. But the risks have changed significantly.
Why oil is rising
Oil markets dislike uncertainty, particularly when it involves one of the world's most important oil-producing regions.
The Middle East supplies a substantial proportion of global oil production, while the Strait of Hormuz is one of the critical routes through which oil reaches international markets.
Any serious disruption can therefore have consequences far beyond the countries directly involved.
The market is currently having to consider several risks at the same time.
US–Iran negotiations remain uncertain.
The future of the ceasefire remains unclear.
Oil production has already been disrupted in the region.
Tanker movements remain vulnerable to geopolitical developments.
Some Middle Eastern production may remain offline for an extended period.
Traders are building a risk premium into oil prices because nobody knows how the situation will develop.
That last point is particularly important.
Oil does not have to disappear from the market for prices to rise.
The fear that supplies might disappear can be enough.
The Strait of Hormuz remains the big risk
The Strait of Hormuz is one of the world's most important energy chokepoints.
Large volumes of oil and other petroleum products normally pass through the narrow waterway, connecting the Persian Gulf with international markets.
If shipping through Hormuz were seriously restricted, the consequences could be dramatic.
There would immediately be questions about how much oil was available, how quickly alternative supplies could reach consumers and whether other producers had sufficient spare capacity to compensate.
That is why markets can react so violently to developments around the Strait.
A relatively small change in the political situation can produce a large change in the oil price because traders are effectively asking:
What happens if this gets worse?
Production has already been affected
This isn't simply a story about speculation.
The conflict has already affected oil production in the region.
Recent estimates have suggested that several million barrels a day of Middle Eastern production were temporarily shut in during the disruption.
Even if production eventually returns to normal, bringing fields and infrastructure back into operation takes time.
The US Energy Information Administration has also warned that some Middle Eastern production could remain offline for an extended period.
That provides an important background to today's oil price.
The market isn't starting from a completely normal situation and then adding a geopolitical premium.
There has already been a real reduction in available supply.
Could Brent reach $100?
Quite possibly.
There are several possible paths from today's roughly $91 level.
If negotiations suddenly produce a breakthrough and oil shipments return to normal, prices could fall relatively quickly.
The geopolitical premium would disappear and traders would once again concentrate on supply, demand and inventories.
Brent could potentially move back towards the $80s.
But if the current stalemate continues, the situation becomes rather different.
A prolonged period of uncertainty could keep Brent around the $90 level and make $95 or $100 increasingly plausible.
And there is a third possibility.
If the situation deteriorates significantly, with further attacks on energy infrastructure, additional production being lost or shipping through Hormuz becoming substantially more difficult, the market could move well beyond $100.
In that situation, $110 or $120 oil would no longer look impossible.
But oil prices can also fall surprisingly quickly
There is an important counterargument.
Oil prices are not determined entirely by geopolitics.
Demand matters too.
High oil prices eventually encourage consumers and businesses to use less fuel. Economic growth can slow, reducing demand for petrol, diesel and industrial energy.
Inventories also matter.
If oil stocks begin building, traders can become less concerned about immediate shortages.
The United States has recently recorded a substantial increase in crude inventories, demonstrating that the physical oil market can sometimes move in the opposite direction to geopolitical headlines.
This creates an unusual situation.
One day the market is worrying about shortages and pushing prices higher.
The next, rising inventories or weaker demand can push them lower.
The pound adds another complication for Britain
For British consumers and businesses, there is another factor that is often overlooked.
Oil is priced internationally in US dollars.
That means the exchange rate between the pound and dollar matters.
If Brent rises from $91 to $100 while sterling remains stable, the UK faces higher oil costs.
But if the pound also weakens against the dollar, the increase in the UK cost of imported oil can be greater.
This is one reason why a seemingly modest change in the dollar price of oil can have a surprisingly noticeable effect on the British economy.
When people hear that oil is approaching $100, their first thought is usually the petrol pump.
But crude oil affects much more than petrol. Higher oil prices feed into almost everything.
For rural areas, the impact can be particularly significant because transport is often unavoidable.
And households without access to mains gas can be particularly exposed to heating-oil prices.
The inflation problem could return so governments will be watching the oil price closely. Oil is one of the commodities capable of spreading inflation through an economy.
Higher fuel costs increase transport costs and increase the cost of moving goods.
Businesses then face higher operating costs and may increase prices with consumers also paying more, and workers may demand higher wages to compensate.
That creates the possibility of a second-round inflationary effect.
The danger is therefore not simply that petrol becomes more expensive.
It is that a sustained oil-price increase begins working its way through the entire economy.
That could make the job of central banks considerably more difficult.
$100 oil doesn't necessarily mean another energy crisis and it is worth keeping some perspective. The world economy has experienced $100-plus oil before.
Oil prices have spent long periods well above $100, particularly during previous geopolitical crises.
Modern economies are also more energy efficient than they once were, and alternative energy sources now play a much larger role.
But that does not mean another $100 oil price would be painless.
Britain remains heavily dependent on imported energy, while households and businesses are already dealing with relatively high energy and operating costs.
The timing therefore matters. A $100 barrel arriving after several years of low prices would be one thing but a $100 barrel arriving when consumers and businesses are already under financial pressure would be something else.
The next few weeks could be crucial with the oil market now watching the political situation almost as closely as the physical supply figures.
If the US and Iran find a way forward, oil could fall sharply.
If negotiations remain stuck but the wider conflict doesn't worsen, Brent could remain around current levels or gradually move towards $95–100.
But if the situation deteriorates and oil shipments are seriously disrupted, the market could move much faster.
That is why $100 Brent should not be dismissed as a distant possibility. It is now a realistic scenario and the more important question is what happens after $100.
If it is only a short-lived spike caused by political headlines, consumers may barely notice before prices fall again.
But if Brent stays above $100 for months, the consequences would be much more seriousand Caithness and other rural area feel it most.
For Britain, that could mean higher petrol and diesel prices, more expensive transport, increased heating costs, pressure on businesses and another challenge for inflation.
And for rural Scotland, where distances are greater and alternatives to road transport are often limited, the impact could be particularly pronounced.
The oil market is therefore approaching an important crossroads. A diplomatic breakthrough could send prices back down. A prolonged stalemate could push them towards $100. A serious escalation could take them considerably higher.
For now, the most sensible conclusion is not that $100 oil is inevitable.
It is that the road to $100 is now looking considerably shorter than it did only a few weeks ago.