Middle East Geopolitics Drives Crude Oil Price Rally and Supply Concerns

Middle East Geopolitics Drives Crude Oil Price Rally and Supply Concerns | Q4 2026

Escalating geopolitical risks in the Middle East are tightening crude supply. The U.S. EIA has revised up its Q4 Brent forecast to USD 105 per barrel, and prices could exceed USD 120 if conflicts deteriorate. For industrial chemical buyers affected by cost pass-through, reach out to our team for supply planning.

Geopolitics: The Primary Risk-Premium Driver

Near disruption of shipping in the Strait of Hormuz is the most immediate concern: six merchant vessels, including oil tankers and container ships, were attacked in a single day on October 11, and the UK Maritime Trade Operations (UKMTO) has issued continuous advisories. The U.S. is amassing military forces, with deployment expected to be completed in early November, and targets reportedly include Iran’s energy facilities and nuclear sites.

Pressure is also mounting on Saudi Arabia’s “dual export routes”: its east-west oil pipeline was shut down following an attack, while risks remain elevated in the Bab el-Mandeb Strait (Red Sea), leaving both of Saudi Arabia’s primary export corridors under threat. The U.S. Energy Information Administration estimates that around 4.5 million barrels per day of output in the Middle East will remain offline through the end of Q4.

Tightening Supply

At its October meeting, OPEC+ decided to keep production quotas unchanged, marking the first pause in output increases after successive rounds of hikes. U.S. diesel inventories are tight, with retail diesel prices rising by approximately 75% year-on-year. Potential export increases are limited due to shipping disruptions, reinforcing the supply-side squeeze.

Upgraded Institutional Forecasts

The EIA revised up its forecast for the average Brent crude price in Q4 to USD 105 per barrel, an increase of USD 14 per barrel from the previous month’s projection. Some analyses suggest that Brent crude could break above USD 120 per barrel if the situation continues to deteriorate. For downstream chemical and plastics buyers, elevated energy costs are likely to keep cost support firm across the petrochemical chain through year-end.

None

South Korea’s OCI Permanently Exits TDI Business; China Dominates Global Supply

Step

Country*
Your industry*
Subject *
What is your request? *

Next Step

First name *
Last name *
Phone *
Email *
Company name *
Verification Code *