Oil prices near 2026 peak: Will Brent cross $126 or fall below $100? Key levels explained

FinancialExpress.com reached out to analysts to understand whether the surge in crude prices was being driven by geopolitical uncertainties, supply tightness, or a combination of varying factors: What is driving the current rally in crude prices? Despite the recovery in crude supplies, Brent prices have advanced by more than 18% over the past month. Commodity experts corroborate that the fundamental cause for crude’s surge remains embedded in the geopolitical premium.

Heightened geopolitical tensions caused by the Houthis' attacks on Saudi Arabia’s infrastructure, alongside the news of US diplomats departing the kingdom, continue to keep crude prices at elevated levels. “The evacuation of non-essential US personnel from Saudi Arabia is being read by the market as a concrete escalation signal rather than just rhetoric, and that is why oil is marching higher even as some physical flows have improved,” said Tim Waterer, Chief Market Analyst at KCM Trade.

Citing US officials, the New York Times reported that the United States and Israel have “developed specific plans” for a “short but intensive operation” in Iran, which would target nuclear facilities and energy-related infrastructure. Hareesh V, Head of Commodity Research, Geojit Investments, explains that these uncertainties have led to Brent crude trading at a sizeable premium, as risks from tensions in West Asia, concerns over shipping lanes and supply disruptions continue to surge oil prices.

“While underlying market fundamentals remain relatively balanced, risk sentiment continues to dominate price action,” he added. “The current move in crude is being driven primarily by a rising geopolitical risk premium; another phase of military escalation could be approaching. That has pushed Brent above $110 and is keeping prices in an extended stay in triple-digit prices, Waterer said. How big is this “risk premium”?

Analysts differ. Waterer said it is “easily in the mid-to-high teens per barrel when you factor in war-risk insurance and freight.” Hareesh V put it lower, at roughly $8-15 a barrel, and cautioned that it could swing sharply with developments in the region. Crude’s recent rally associated with geopolitics Traditionally, oil markets are driven by both physical tightness and geopolitical risks. However, experts note that recent price movement is increasingly associated with geopolitics.

According to Kaynat Chainwala, AVP Commodity Research, Kotak Neo, the physical indicators for oil prices have eased from their early-October extremes, with Brent EFP (Exchange for Physical) contracting near $10.7 from above $20, and refining margins also softening from recent peaks. However, she flags that physical tightness has not entirely disappeared, given the high prices of crude imports in India.

“The Indian Basket was trading at around $120/bbl, significantly above Brent at roughly $113/bbl, indicating continued competition for physical barrels,” Chainwala said. “However, thin inventories and tight product markets continue to provide fundamental support, meaning that even if geopolitical tensions were to ease, Brent would likely remain above pre-war levels,” Chainwala said. Hareesh V made a similar point: “Oil prices continue to reflect supply-risk concerns rather than current availability.”

IEA caution raises further concerns Recently, the head of the International Energy Agency (IEA), Faith Birol, warned that oil prices are unlikely to normalise by 2027. The IEA’s caution raised questions over future shocks and price disturbances. According to Chainwala, amidst the current geopolitical landscape and tight refining capacity, markets remain vulnerable to further shocks. For the year-end, she expects Brent to average near the $100-120/bbl range, while the Kotak analyst expects WTI to trade between $90-110 “Risks remain skewed to the upside as long as attacks on regional energy infrastructure persist and geopolitical tensions remain elevated,” Chainwala said.

"A ceasefire in West Asia and uninterrupted flows through the Strait of Hormuz could trigger a sharp correction of $20-25 per barrel. However, absent such a development, geopolitical risk premiums are likely to keep prices elevated despite concerns over global demand and non-OPEC supply growth,” he added. Could Brent soar to 2026 high? Brent prices hit a peak of $126.41 in late April, nearly 7% above its recent high.

Chainwala said a retest towards these levels would likely need a direct disruption to Saudi. Absent such developments, she sees Brent trading the $105-120/bbl range. While Hareesh V, there remains a possibility of Brent peaking near its 2026 high. However, he mentions that rising non-OPEC supply and concerns over global demand growth could limit upside beyond those levels. What would it take for Brent to fall below $100?

Analyst note: With the US midterm elections nearing, crude prices are expected to remain elevated over the longer course of the run. In such a scenario, for Brent to fall below $100/bbl, geopolitical and physical premium risk needs to unwind. Chainwala states that for prices to ease, the following events would need to unfold: A verifiable US-Iran deal that reopens Hormuz and normalises shipping insurance An end to Houthi attacks on Saudi infrastructure, with export routes secure No renewed US-Israeli strikes on Iran after the midterms Further softening in the EFP and crack spread to confirm tightness is fading Additionally, Hareesh V notes that a weaker demand outlook and dollar stability could also ease the price pressure