Brent Breaks Through US$104, Market Nervous as Middle East Conflict Prolongs

Brent crude traded at $104.24 a barrel for July, with West Texas Intermediate at $97.48, at 09:50 WIB, according to Refinitiv data. The previous day Brent closed at $102.58 and WTI at $96.35. Despite the morning advance, price movements over the week have been highly volatile. In under two weeks, Brent touched $112.1 on May 18 before dropping back to around $102, and WTI moved from $108.66 toward the $96-$97 range. The volatility stems from a mix of geopolitical conflict, potential supply disruptions, and speculation about OPEC+ production policy. Reuters reported that US-Iran negotiations remain difficult, with Iranian officials saying no deal has been reached though views are narrowing. Meanwhile, US Secretary of State Marco Rubio said there were ‘positive signs’ in talks, but the US rejects any tariff system or control over the Hormuz Strait. Markets view the Hormuz Strait as the energy nerve centre of the world. Before the war, about 20% of global energy flows passed through this narrow route. The ongoing conflict has reduced global oil supply by around 14 million barrels per day, equivalent to 14% of global supply, including exports from Saudi Arabia, Iraq, the UAE, and Kuwait. The head of Abu Dhabi’s national oil company, ADNOC, even estimated that normal oil flows through Hormuz would not recover fully until the first or second quarter of 2027, even if the conflict ends today. This statement led market players to reassess potential long-term supply crises. Rakuten Securities commodity analyst Satoru Yoshida said the morning price rise was spurred by uncertainty in the peace talks, with the market continuing to see a high risk of supply disruption from the Middle East until Hormuz stabilises. Yoshida forecast WTI to move next week in the $90-$110 per barrel range, a pattern that has characterised since late March. In terms of supply, seven major OPEC+ countries are seen as likely to approve a modest production increase target for July at the 7 June meeting. But the additional output may not calm markets as oil distribution from several producing countries remains disrupted by the Iran conflict. The price surge has renewed concerns about global inflation, as energy importers face higher logistics, transport, and food costs if prices stay above $100 per barrel for an extended period. The situation pushes global markets into a sensitive phase: diplomacy offers hope on one hand, while fear of supply crises remains on the other.