Brent Crude Surpasses $85 as U.S.-Iran Conflict Revives Oil Shortage Concerns
Escalating hostilities between the United States and Iran have lifted Brent crude above $85 a barrel, prompting OPEC to lower its 2026 demand growth forecast and reigniting worries about a global oil shortage.
Brent crude rose above $85 a barrel on Tuesday after renewed U.S.-Iran clashes led to the closure of the Strait of Hormuz and the anticipated reinstatement of a U.S. maritime blockade. The shift reversed recent market sentiment that had focused on an oversupply of oil, moving benchmarks into steep backwardation and reviving concerns of a worldwide shortage.
OPEC cut its 2026 global oil demand growth forecast to 780,000 barrels per day, down from 970,000 barrels per day a month earlier, marking the third consecutive downward revision. The organization raised its 2027 outlook to 1.94 million barrels per day.
U.S. President Donald Trump announced the re-imposition of the blockade, describing the United States as the “Guardian of the Hormuz Strait” and stating that the government would seek compensation for cargoes affected by the restriction.
The conflict also heightened regional risk premiums after Iranian missiles struck two UAE-chartered VLCC tankers in the southern lane of the Strait, causing one fatality. Iran’s Oil Ministry said exports continued at an average of 1.35 million barrels per day in July despite the blockade.
In related energy markets, Asian LNG demand reached a July high of 23 million tonnes as the region competed with Europe for limited cargoes, pushing the Asian benchmark JKM to $19.5 per MMBtu. European LNG imports are projected to fall to 6.90 million tonnes this month, a two-year low.
Other notable developments included a $5.34 billion investment by a Blackstone-led consortium for a 49 % stake in five Ohio power projects owned by Williams, Shell’s sale of its Indian renewables unit Sprng Energy for $1.8 billion, and Nigeria’s grant of a production-linked tax credit to Shell for the Bonga expansion project.