10th September 2026
The $100 oil barrier has been broken. Now the market is looking towards $105.
Brent crude has been trading around $101 a barrel, but the significance of the latest move is not simply another few dollars on the oil price. It is what is happening behind that price. Attacks on shipping are continuing, traffic through the Strait of Hormuz has fallen sharply and the conflict shows little sign of a quick resolution.
A few weeks ago, $100 oil looked like a warning sign. At $105, the question becomes whether the market is beginning to accept that very high oil prices could last for much longer than originally expected.
That distinction matters enormously for Britain.
Oil prices do not arrive on household bills overnight. The crude price rises first, followed by wholesale fuel costs, then petrol and diesel prices, transport costs and eventually the prices of goods and services. The longer the shock lasts, the more deeply it works its way through the economy.
And that is why the next few weeks could be more important than whether Brent briefly touches $105.
The Middle East now presents three very different possibilities. The fighting could end and oil could fall back towards more normal levels. The conflict could drag on, leaving the world struggling with $100–120 oil for months. Or it could escalate into a much wider disruption of Middle Eastern energy supplies, sending prices dramatically higher.
Nobody can say which path will be taken.
But the oil market is already sending a message that Britain should not ignore.
$100 was the warning. $105 could be the next test.
Events of the past 24 hours have made that possibility more credible. Iran says it has attacked 10 ships near the Strait of Hormuz following US strikes that sank five Iranian oil tankers. At least one seafarer has reportedly died and another is missing. A tanker carrying about two million barrels of Iraqi fuel oil caught fire after a drone attack.
The United States says its warships were not hit, but the significance of the attacks is wider than any individual vessel. They demonstrate that commercial shipping is increasingly becoming part of the conflict.
And the shipping figures are becoming particularly uncomfortable.
Only seven vessels passed through the Strait of Hormuz on Wednesday, compared with 12 the previous day and a ten-day average of 14. Just one of the four vessels leaving the strait was a very large crude tanker, carrying almost two million barrels. No LNG tankers left at all.
There is a warning attached to these figures because some ships can switch off their tracking systems. Nevertheless, the broad picture is clear. Ships and their owners are becoming increasingly reluctant to risk using one of the world's most important energy routes.
Before the conflict, roughly one-fifth of the world's oil and gas supplies passed through Hormuz. There are alternative routes and stockpiles, but they cannot simply replace the strait overnight.
That is why Brent has climbed almost 30% from its early-August low and has remained above $100 in the physical market since September 3. On Thursday morning it was around $100.50, after having settled at $101.21 the previous day.
But oil prices do not move in a straight line. What happens next depends heavily on what happens in the Middle East.
Scenario One: The Fighting Ends and Hormuz Reopens
The most optimistic outcome would be a political agreement between the United States and Iran, followed by a gradual restoration of safe shipping.
Oil could fall surprisingly quickly.
The reason is that part of the current price is a geopolitical risk premium. Traders are not simply paying for today's barrels. They are paying for insurance against the possibility that tomorrow's barrels will not arrive.
If that fear disappears, Brent could retreat towards the $80–90 range, particularly if Chinese demand remains weak and other producers continue supplying the market.
But petrol and diesel prices would not immediately follow crude oil down. There is a time lag between the oil price, wholesale fuel prices and what motorists see on the forecourt. Retailers also have existing stocks bought at higher prices.
For households, therefore, an end to the conflict would probably bring relief rather than an instant return to cheap fuel.
This is the scenario everyone would prefer. Unfortunately, the latest events suggest it cannot yet be relied upon.
Scenario Two: The War Drags On
This may now be the most important scenario.
The conflict does not have to become a much bigger war for oil to remain expensive. It simply needs to continue without a lasting settlement.
If shipping through Hormuz remains severely restricted while some oil continues to get through, the world can adapt. Tankers can take greater risks, routes can change, strategic stocks can be used and alternative supplies can be brought into the market.
But adaptation costs money.
Insurance becomes more expensive. Tankers demand higher rates. Refineries compete for particular grades of crude. Countries compete for available cargoes. Companies build larger inventories because they are less confident about future deliveries.
Those costs eventually find their way into the real economy.
Brent could spend months somewhere around $100–120 rather than shooting immediately to $150. That may actually be more damaging than a brief price spike because businesses begin building the higher cost into contracts, investment decisions and wages.
Britain would feel it through petrol and diesel, heating oil, aviation, food distribution, manufacturing and household bills.
And then there is interest rates.
The Bank of England cannot produce more oil. If an energy shock pushes inflation higher, it faces the uncomfortable choice of accepting higher inflation or keeping monetary policy tighter for longer.
That is how an apparently distant conflict in the Gulf becomes a problem for someone with a mortgage in Wick or a business in Thurso.
Scenario Three: The Conflict Escalates Dramatically
The third possibility is much more serious.
If attacks spread to major oil-production facilities, export terminals or pipelines, or if Hormuz became effectively closed for a prolonged period, the oil market would face a genuine physical supply crisis.
Prices could move towards $120 and potentially $150 in an extreme situation. Some analysts are already discussing those levels, although they should be regarded as stress scenarios rather than forecasts.
At those prices the consequences would be enormous.
Petrol and diesel would rise sharply. Transport costs would increase. Airlines would face another major fuel shock. Food production and distribution would become more expensive. Energy-intensive industries would come under pressure.
Central banks would face an unpleasant combination of weak economic growth and higher inflation.
There is, however, an important brake on very high oil prices.
Demand eventually starts to fall.
People drive less. Businesses cut journeys. Airlines reduce capacity. Factories become more efficient. Consumers postpone purchases. Alternative energy becomes more attractive. Governments release strategic stocks and producers elsewhere increase output where they can.
In other words, $150 oil contains the seeds of its own correction.
The danger is what happens before that correction arrives.
There Is Another Possibility: The New Normal
There is perhaps a fourth scenario hiding between the three.
The Middle East conflict could remain unresolved for a long time without completely shutting down Hormuz.
That could leave the world living with oil at $90, $100 or $110 for an extended period.
This is arguably the scenario that should concern Britain most.
A spectacular oil spike gets headlines. A permanently higher cost base gets absorbed into the economy.
Businesses eventually stop thinking of $100 oil as an emergency and start treating it as a cost of doing business. Governments have to build higher energy costs into budgets. Households change their spending habits. Wage demands respond to higher living costs.
The price shock becomes embedded.
China Could Decide How High Oil Goes
There is another factor which is easy to overlook.
And Then China Starts Buying Again
There is another part of the oil story that could prove just as important as what happens in the Strait of Hormuz.
China has spent much of the recent crisis buying considerably less crude than normal and drawing on oil already in storage. That reduction in demand has quietly helped take some pressure off the international market at precisely the time when Middle Eastern supplies have been under threat.
Chinese seaborne crude imports rose from about 6.9 million barrels a day in July to 7.1 million in August, but that was still almost 40% below the average level in the three months before the Iran conflict. There are also signs that China began adding modestly to its inventories again in July after drawing them down during May and June.
This matters because China cannot keep relying on its existing stocks indefinitely.
If Beijing now begins rebuilding its reserves more aggressively, it will be buying more crude on the international market just as the Middle East is struggling to get oil through Hormuz. That would put additional pressure on a market already dealing with a shortage.
It creates a potentially uncomfortable combination.
The supply side is being squeezed by the conflict while the demand side could be strengthening as China returns to the market.
That is one reason the next move from $100 towards $105 could happen more quickly than some expect. If Chinese demand remains subdued, the market has more room to absorb the Middle East disruption. If China starts buying heavily again, that cushion disappears.
There is an important qualification. Nobody outside the Chinese government knows exactly how much oil China has in strategic and commercial storage. Estimates vary and Beijing does not publish a complete inventory figure. So it would be wrong to claim that China has "run out" of its oil reserves.
But the change in its buying behaviour is visible.
China has already demonstrated that it can temporarily reduce its call on the international oil market. The question now is whether it starts doing the opposite.
If it does, the world could face the unusual situation of less oil getting through the world's most important energy chokepoint at exactly the same time as one of the world's biggest oil buyers starts filling its tanks again.
That is a combination the oil market would find difficult to ignore.
The Real Question for Britain
It is tempting to watch the oil price every morning and ask whether Brent has crossed $100.
That is the wrong question.
The more important question is how long it stays there.
A few days above $100 is a problem. Several months could be a serious inflationary shock. A year or more could change economic behaviour, investment decisions and government finances.
Britain is less directly dependent on Gulf oil than some countries, but it does not live in an economic bubble. Oil is traded on a global market. If the world has fewer barrels available, Britain pays more for the barrels it buys.
That eventually reaches the forecourt, the supermarket, the factory, the delivery van and the household budget.
The latest attacks therefore matter for a reason that goes beyond the Middle East itself.
They suggest that the conflict is moving into a more dangerous phase for global commerce, with commercial shipping increasingly caught in the middle and traffic through Hormuz falling sharply.
Nobody can predict with confidence whether the next stop for Brent is $90, $120 or something considerably higher.
But one conclusion is becoming easier to reach.
The $100 barrier has already gone. $105 may be the next test. But the real danger comes if Middle Eastern supply remains restricted while China returns to the market in force. At that point, $105 might not be the destination at all. It could simply be the next stop.