Robert Harvey | Reuters | Tuesday, August 18, 2026 | 12:00 PM UTC
Global oil prices moved higher on Tuesday, August 18, reaching their strongest levels in almost three weeks as markets reassessed the likelihood of a resolution to the ongoing U.S.-Iran conflict and the reopening of the Strait of Hormuz.
Brent crude futures rose to around $91.07 per barrel, while U.S. West Texas Intermediate (WTI) traded near $84.99 per barrel. Both benchmarks briefly reached their highest levels since July 30 and July 31 respectively.
The latest gains extend a three-session rise in oil prices and reflect growing concern that disruption to Middle Eastern crude exports could last longer than previously expected.
Strait of Hormuz Remains Central to Oil Market Risk
The Strait of Hormuz remains the central issue facing global oil markets.
Progress toward restoring normal tanker traffic through the strategic waterway has stalled alongside diplomatic efforts to reach a permanent settlement between the United States and Iran.
Iran has said that it intends to keep the Strait of Hormuz closed until Washington fulfils conditions associated with an interim agreement reached in June. The United States, meanwhile, has ruled out simply extending the previous arrangement.
The result is continued uncertainty over one of the world's most important energy corridors.
Although crude shipments have not stopped completely, tanker crossings remain severely constrained. Reuters reported that crossings have recently remained in the single digits, significantly limiting the volume of oil moving through the route.
For energy markets, the concern is increasingly shifting from whether Hormuz disruption will affect near-term prices to how long restricted flows could continue.
Saudi Arabia Finds Alternative Route for Some Cargoes
Some Middle Eastern producers are adapting their export strategies.
Saudi Aramco has resumed some oil loadings from locations inside the Strait of Hormuz while offering cargoes through ship-to-ship transfers off Fujairah in the United Arab Emirates.
Such measures provide an alternative for selected shipments but are not yet sufficient to restore the scale of normal Gulf exports.
This leaves global buyers, particularly Asian refiners that depend heavily on Middle Eastern crude, exposed to higher freight costs, supply uncertainty and continued price volatility.
Markets Begin Looking Toward 2027
The duration of the disruption is becoming increasingly important for longer-term oil pricing.
Suvro Sarkar, head of energy research at DBS Bank, told Reuters that the absence of an agreement could influence oil-price expectations not only during the fourth quarter of 2026 but potentially into 2027.
That outlook marks an important shift in market sentiment.
Earlier expectations that disruption through Hormuz could prove temporary are increasingly being replaced by the possibility of a prolonged geopolitical risk premium across crude markets.
The U.S. Energy Information Administration has separately indicated that some Middle Eastern oil production disrupted by the conflict could remain offline through the end of 2027. Around 5.5 million barrels per day of regional production was shut during July, according to the agency's latest assessment.
Wider Regional Risks Add Pressure
Uncertainty is not limited to the Strait of Hormuz.
Iran has also been negotiating with Oman over arrangements concerning management of the waterway, while tensions surrounding those discussions have added another layer of political uncertainty.
At the same time, renewed attacks around the Red Sea continue to threaten another strategically important maritime corridor.
Yemen's Houthis said they launched missiles targeting vessels described as a Saudi military ship and accompanying escorts in the Red Sea, further highlighting the wider security risks affecting Middle Eastern shipping routes.
The combination of restricted Hormuz traffic and continued Red Sea security concerns places additional pressure on shipping, insurance and energy supply chains.
What It Means for the Energy Sector
For oil and gas companies, traders and energy-intensive industries, the current market environment points toward continued volatility.
A prolonged disruption could influence crude prices, refinery margins, shipping rates and fuel costs across major importing economies.
It may also accelerate efforts by Gulf producers and global buyers to diversify export routes, expand strategic storage capacity and reduce reliance on vulnerable maritime chokepoints.
For the broader energy market, developments around Hormuz remain one of the most important variables determining oil prices through the remainder of 2026.
Any credible agreement that allows large-scale tanker traffic to resume could quickly ease the geopolitical premium currently supporting crude prices.
Until then, restricted Gulf exports and uncertainty surrounding U.S.-Iran negotiations are likely to remain key drivers of the global oil market.
