Oil rose to its highest price in four years on Thursday, topping $120 a barrel as the US increased pressure on Iran.
Brent, the benchmark for two-thirds of the world's oil, climbed 2.88 per cent to $121.40 a barrel at 7.16am UAE time. West Texas Intermediate, the gauge that tracks US crude, was also up nearly 1.36 per cent to $108.30 per barrel.
Oil had surpassed $120 per barrel in 2022, primarily driven by supply shocks and geopolitical tensions. Since the Iran war broke out on February 28, Brent has risen by 64 per cent, while WTI has leapt by 60 per cent.
Crude is in “rally mode” after as US-Iran standoff worsens, said Vandana Hari, chief executive of Singapore-based Vanda Insights. Futures price are in extended “Hormuz standoff”, with “fears of return to war”, she added.
Goldman Sachs had warned earlier this week that oil prices could approach $120 a barrel later this year amid a continued stalemate in peace talks between the US and Iran, which leaves Gulf shipments uncertain for longer.
The global investment bank had raised its oil price forecasts for the fourth quarter of 2026, lifting its Brent crude target to $90 per barrel and WTI to $83 per barrel, warning that massive Middle East production losses are driving global oil inventories lower.
US President Donald Trump on Wednesday warned Iran it needed to get its "act together", hours after Tehran said it has the right to take “necessary and proportionate measures” in the Strait of Hormuz.
The US has been reviewing an Iranian proposal, but according to American outlets, Mr Trump has been disappointed by the fact that it does not address Iran's nuclear programme.
His warning comes amid growing international criticism of Iran’s effective closure of the strait following US and Israeli strikes in late February, which triggered a wider regional conflict.
The UAE’s Opec exit has also heightened concerns about prolonged supply disruptions.
“UAE’s shock exit marks a structural break in Opec/Opec+, raising questions over the durability of co-ordinated supply management,” said Ms Hari.
