WTI Nears $89.50 as Geopolitics, Weather Support Oil

Key Moments

WTI Strengthens on Middle East Tensions and U.S. Storm Risks

West Texas Intermediate (WTI) crude futures extended their rally for a second consecutive session, with prices trading around $89.50 per barrel during Asian hours on Wednesday. The move higher came as persistent threats to Middle East energy supplies outweighed signs of increased regional output.

Reports indicated that Iran has stepped up attacks on tankers transiting the Strait of Hormuz in recent days. The UK Maritime Trade Operations has recorded nine incidents in the waterway so far this month. At the same time, a Saudi-led coalition reported that it had intercepted and destroyed a ballistic missile launched by the Houthis toward Khamis Mushait in Saudi Arabia.

Traders also monitored potential disruptions from severe weather forming near key U.S. energy infrastructure. National forecasters on Tuesday warned that a developing system in the Gulf of Mexico is expected to strengthen into the Atlantic’s first hurricane of 2026 within 48 hours, posing a direct threat to offshore oil and gas platforms.

EIA Ups Oil Price Outlook on Tight Balances and Middle East Conflict

The U.S. Energy Information Administration (EIA) raised its oil price projections for this year and next on Tuesday, citing rapidly declining global inventories and tight diesel markets tied to the ongoing Iran war. In its latest Short-Term Energy Outlook, the agency noted that recent attacks on Saudi Arabia’s East-West Pipeline highlight the enduring risk of further disruptions to physical crude flows and market pricing.

According to the updated outlook, the global benchmark Brent crude is now expected to average roughly $105 a barrel in the fourth quarter, an increase of $14 from the previous estimate. For 2026 as a whole, Brent prices are projected to average around $98 a barrel, representing an 8% upward revision from last month’s forecast.

The EIA also addressed refined product markets, indicating that U.S. retail diesel prices, which climbed to record levels last month, are projected to remain above $6 a gallon through October. Prices are then anticipated to ease gradually, reaching an average of approximately $4.50 a gallon in 2027.

Persian Gulf Flows Rebound, Tempering Further Upside

Despite the prevailing geopolitical tensions, gains in crude prices are being moderated by signs of recovery in Persian Gulf exports. Tankers are continuing to move through the Strait of Hormuz, albeit with greater discretion amid elevated security risks. In addition, Saudi Arabia’s East-West oil pipeline has restored its crude throughput to 5.8 million barrels per day, helping to support overall supply from the region.

Strategist View: Tight Balances Despite Higher Flows

Market analysts at TD Securities emphasized that additional supply has not fully alleviated tightness in crude benchmarks. According to TD Securities, “crude oil is being weighed down by increasing flows,” but these additional barrels are “increasingly being met by both higher demand and Iranian/Houthi hostility.” The firm’s strategists noted that stronger consumption and continued disruption risks tied to Iran and Houthi actions are absorbing rising volumes, leaving underlying balances tighter than headline flow numbers might imply.