Prepared by: Dr. Riyadh Malik Mohsen The global oil market witnessed significant volatility during September 2026 amid security and military developments related to the Strait of Hormuz, one of the world’s most critical maritime routes for energy transportation. Concerns regarding the safety of oil tanker movements have directly influenced market sentiment, pushing prices higher and driving Brent crude above the $100 per barrel threshold in several trading sessions. The Strategic Importance of the Strait of Hormuz The Strait of Hormuz serves as a vital gateway for oil and natural gas exports from the Gulf region to international markets. Prior to the current tensions, approximately one-fifth of global oil supplies passed through the strait, making any disruption to maritime traffic a significant factor affecting expectations of global supply and oil pricing. Its influence extends beyond the actual volume of oil reaching markets. Increased security risks prompt shipping and insurance companies to raise transportation and insurance costs, adding a substantial risk premium to crude oil prices. Impact on Oil Prices Brent crude experienced sharp fluctuations throughout September. On 23 September, Brent rose by approximately 3.9% to close at $103.08 per barrel, while West Texas Intermediate (WTI) climbed to $92.16 per barrel. The following day, Brent increased by another 3.4%, reaching $106.60 per barrel amid renewed concerns over supply security following an attack in Saudi Arabia. However, prices declined on 25 September as indications emerged of a potential diplomatic pathway between the United States and Iran. Brent fell by 2.1% to $104.32 per barrel, while WTI settled at $92.41 per barrel. These movements demonstrate the market’s sensitivity to geopolitical developments: heightened concerns over supply disruptions tend to support prices, whereas signs of de-escalation place downward pressure on the market. Will Oil Prices Continue to Rise? Not necessarily. Oil prices are influenced by a wide range of factors beyond geopolitics, including global production levels, inventories, demand patterns, shipping activity, and the ability of producing countries to utilize alternative export routes. A notable example is the resumption of operations on Saudi Arabia’s East–West Pipeline, which enables crude exports to reach the Red Sea port of Yanbu without passing through the Strait of Hormuz. The pipeline’s full capacity is estimated at approximately 7 million barrels per day, although restoring maximum operational capacity may require several weeks due to damage sustained at certain pumping stations. In addition, some Gulf oil companies have increasingly relied on ship-to-ship transfer operations in the Gulf of Oman as a means of reducing tanker-related risks. According to Reuters-reported data, the volume of oil transferred through this method increased to approximately 2.5 million barrels per day during September, compared with around 1.4 million barrels per day in August. While these alternatives help maintain supply flows, they are associated with significantly higher transportation costs. Consequently, prolonged disruptions may increase the cost of delivering oil to consumers even if export volumes continue to reach global markets. Possible Scenarios . Continued Disruptions If security risks persist and tanker movements face greater restrictions, oil prices are likely to remain under upward pressure due to concerns about supply shortages. In this scenario, the risk premium may continue supporting prices, accompanied by higher transportation and insurance costs. . Improvement in Maritime Traffic A recovery in shipping activity and higher export volumes from Gulf producers could ease pressure on the market. Recent market reactions indicate strong sensitivity to news concerning increased oil flows through the Strait of Hormuz and the activation of alternative export routes. . De-escalation or a Diplomatic Agreement This scenario would have the greatest impact on reducing the geopolitical risk premium. Improved navigation conditions and a more stable flow of oil exports could alleviate concerns regarding supply shortages and contribute to lower prices compared with current crisis levels. The decline in Brent prices on 25 September reflected growing optimism regarding the possibility of a ceasefire and renewed diplomatic engagement between the United States and Iran. Outlook for the Global Oil Market In its report issued on 9 September 2026, the U.S. Energy Information Administration (EIA) indicated that disruptions affecting oil flows through the Strait of Hormuz and the Bab el-Mandeb Strait had increased volumes of disrupted production. The agency estimated average disrupted production in August at approximately 6.7 million barrels per day and projected that Middle Eastern oil flows would remain constrained during the final quarter of 2026, with Brent crude averaging around $90 per barrel during the second half of the year. However, subsequent developments in September pushed actual market prices above these projected averages, highlighting how rapidly oil market expectations can change in response to evolving geopolitical conditions. As a result, the future direction of oil prices will largely depend on the balance between geopolitical risks, supply resilience, and the effectiveness of diplomatic efforts aimed at restoring stability to global energy markets.