| Quick Answer Oil prices are climbing back toward $100 a barrel because of a six-month conflict between the US and Iran that keeps disrupting supply near the Strait of Hormuz, a key shipping route for roughly a fifth of the world’s oil. Fresh attacks on oil tankers and warships in early September 2026 pushed Brent crude to around $98 a barrel and US petrol prices to a Labor Day record. If prices stay high, expect pricier fuel, higher shipping costs, and renewed inflation pressure across the global economy. |
If you have been filling up your gas tank lately, you must have noticed the price rising yet again. Indeed, the cost of Brent crude oil, the leading oil benchmark, was pushing back towards $100 a barrel, hitting around $98 to $99 in early September 2026, its highest level in two months. The US petrol prices climbed to a record last weekend over the Labour Day.
The current situation is a part of the long oil price increase that started in late February 2026, when the military conflict between the US and Iran broke out. This is the complete picture of the situation, including what happens to oil prices, its effect on the market, and your wallet.
Why Are Oil Prices Climbing Again?
The short answer: war and worry. Fresh fighting in the Middle East has reignited fears that oil supply could be disrupted again, and markets tend to price in fear well before anything is confirmed.
1. The US-Iran Conflict Just Won’t Cool Down
The conflict between the US and Iran started on 28 February 2026 and is already entering its sixth month. Back in early September, the US attacked three Iranian oil tankers while Iran retaliated by attacking two US warships. Neither side is willing to give way, and every new attack sends shockwaves through the oil market as traders try to price in all the possible consequences that the further development of hostilities can have.
2. The Strait of Hormuz Is the World’s Riskiest Shipping Lane
A considerable part of the world’s oil resources, almost a fifth of total world production, transit via the Strait of Hormuz, a narrow water region between Iran and Oman. Several times this week, Iran threatened to stop all ships from passing through the Strait, causing Saudi Arabia, Iraq, and the UAE to halt production. Such a scenario would lead to skyrocketing oil prices. Indeed, just a few months ago, the threat to close the Strait by Iran triggered a spike of Brent by about $61 a barrel in January to $118 a barrel at the end of March, one of the largest price increases in history. Now experts are waiting for another rise in prices.
3. Markets Remember How Bad It Got Earlier This Year
Oil prices actually cooled off by mid-June, dropping below $70 a barrel once the strait reopened and supply started flowing more normally. That drop shows the market can calm down quickly — but it also shows how fast prices can swing the other way when trouble flares up again, which is exactly what’s happening now.
How Could Rising Oil Prices Affect the Global Economy?
Higher Prices at the Petrol Pump
This is the effect everyone feels first. US retail petrol prices are already running about 95 cents a gallon higher than a year ago, and analysts expect that gap to widen if crude stays near $100. Normally, petrol prices ease off a bit in autumn. This year, that seasonal dip may simply not happen.
A Fresh Headache for Inflation
With the fall in wholesale prices of oil over the summer, fuel prices came down – a process that has quietly contributed to lowering official inflation rates. The rise in oil prices threatens to reverse this trend in official inflation numbers, which puts the central banks into a quandary. Suppressing the rate of price increases by raising interest rates, which is appropriate if this is inflation due to an overheated economy, but not if the cause is rising oil prices, is considered by many economists to be one of the most egregious policy errors a central bank can make.
Higher Costs for Shipping and Everyday Goods
Oil isn’t just fuel for cars — it powers the ships, lorries, and planes that move nearly everything you buy. When crude oil gets more expensive, shipping costs rise too, and that extra cost tends to trickle down into the price of groceries, electronics, and clothes, arriving at the shop shelf a few months after the oil price itself moves.
Pressure on Countries That Import Oil
The countries importing most of their oil, e.g., India and many European nations, are the first to feel the effects of rising prices since it increases their import costs, regardless of the change in demand. However, China has been buying more oil and selling more refined products this year, thus lightening some pressure on the world market.
Will Oil Prices Keep Rising?
Not everyone believes that $100 oil is here to stay. Goldman Sachs recently raised its price targets to $85 for Brent and $80 for WTI, reflecting the ongoing conflict, but that’s still below the current market price. JPMorgan’s research team is even more cautious about a lasting spike, forecasting Brent to average around $86 in the third quarter of 2026, which will then ease to $80 by the fourth quarter, and $78 by the year-end as supply and demand will rebalance the market. In other words, most analysts believe today’s prices to be a spike caused by the fear of war, not the new normal, but it all will depend on how the conflict will unfold from now on.
Key Takeaways
- Oil prices are rising toward $100 a barrel mainly due to the ongoing US-Iran conflict and fears over the Strait of Hormuz
- US petrol prices have already hit a Labor Day record, and further rises are likely if crude stays high
- Higher oil prices tend to push up inflation, shipping costs, and the price of everyday goods
- Most major bank forecasts expect prices to ease later in the year, unless the conflict escalates further
Frequently Asked Questions
Why are oil prices going up right now?
Oil prices are rising because of renewed fighting between the US and Iran, including attacks on oil tankers and warships in early September 2026, which has raised fears of supply disruption near the Strait of Hormuz.
Will oil hit $100 a barrel again?
Brent crude has come close, trading around $98 to $99 a barrel in early September 2026. Whether it crosses $100 depends largely on how the US-Iran conflict develops in the coming weeks.
How does rising oil affect everyday people?
Higher oil prices usually mean more expensive petrol, higher costs for transporting goods, and, over time, higher prices for everyday items like food and clothing.
Do experts think oil prices will stay this high?
Most major forecasts, including from Goldman Sachs and JPMorgan, expect prices to ease later in 2026 as supply and demand rebalance, though this depends on the conflict not escalating further.
What is the Strait of Hormuz and why does it matter for oil prices?
It’s a narrow shipping channel between Iran and Oman that roughly a fifth of the world’s oil passes through. Any disruption there has an outsized effect on global oil supply and prices.
