Oil Prices Hit $110 as StanChart Predicts Volatile Market

Brent crude reached nearly $110 per barrel on Thursday. This marks the first time prices have hit this level since July. The surge reflects escalating tensions in the Middle East. The International Islamic Revolutionary Guard Corps claimed attacks on eight oil tankers and two U.S. Navy destroyers in the Strait of Hormuz. These actions followed U.S. strikes on five IRGC-linked vessels in the Gulf of Oman. U.S. Central Command denied the IRGC claims of damaging its warships.

Diplomatic prospects for a quick resolution appear slim. President Donald Trump stated the conflict is unlikely to end before November midterms. Advisors have warned the war could persist for the remainder of his term. By Friday morning at 7:10 a.m. ET, Brent crude traded at $103.58. WTI crude stood at just over $98 per barrel. Market participants at the APPEC conference in Singapore are positioning for prolonged disruption.

StanChart Forecasts Persistent Price Volatility

Standard Chartered analysts expect sharp price gyrations to continue through the third quarter. The bank predicts oil will average $77.50 per barrel in 2027. This forecast accounts for returning demand, particularly from China. It also includes the need to refill and expand strategic reserves. The bank notes that global spare capacity and inventories are decreasing. This reduction limits the market's ability to absorb simultaneous disruptions.

The price implication is increasingly asymmetric. Markets are characterizing by more frequent and sharper upside spikes. These rallies often fade quickly, but the upside tail is expanding. Volatility now commands a greater premium. Refined products face higher vulnerability to disruptions than crude oil. Middle distillates remain extremely strong due to heat and drought. Diesel, gasoil, and jet fuel are outperforming gasoline in price.

China Drives Global Oil Flexibility

China’s rebounding appetite for crude imports provides significant flexibility. The country is redirecting refined product supplies to tight Asian markets. Consumers are placing greater value on optionality across crude grades. They are also seeking diverse suppliers and refining configurations. Repeated disruptions have reshaped established global trade flows. This shift reduces reliance on single-source supply chains.

Qatar Tests LNG Export Feasibility

Europe’s natural gas prices rose above €81 per MWh on Thursday. This is the highest level since December 2022. A Qatar-loaded LNG carrier sailed through Hormuz on September 8. The vessel was bound for Pakistan. This transit follows several empty Qatar-linked carriers returning to the Persian Gulf. It suggests Qatar is testing the feasibility of restarting exports through the waterway.

Outbound LNG flows from the Persian Gulf remain well below pre-war levels. QatarEnergy extended force majeure on deliveries to European and Asian buyers. This extension covers October and November. Substantial uncertainty remains regarding the resumption of sustained exports. The situation reflects the ongoing fragility of energy logistics in the region.