Oil prices are on track for a second consecutive weekly increase, driven by continued tensions between the United States and Iran that are affecting supply lines. The geopolitical risk factor has contributed to maintaining a premium in the oil market, with Brent crude — the benchmark for much of the world's internationally traded oil — trading between $91.8 and $93.8 per barrel, and West Texas Intermediate (WTI), the main US benchmark, between $84.2 and $88.3 per barrel. Brent crude has risen 0.9% over the past month, illustrating the market's focus on potential supply disruptions. The move is consistent with the market's typical reaction to geopolitical risk, as the possibility of further instability could continue to impact oil prices. Iran sits beside the Strait of Hormuz, the Persian Gulf chokepoint through which roughly a fifth of globally traded oil passes, a corridor that has been a recurring focus of supply concern in previous periods of US-Iran tension.

Market pricing suggests that the ongoing US-Iran tensions are consistent with support for elevated oil prices. The likelihood of oil reaching a new all-time high by the end of September remains low, with current prediction-market odds at 3%. A new record would mean surpassing the July 2008 peak, when Brent traded near $147 a barrel — well above today's range — which helps explain the low near-term odds. The December 31 market shows a higher probability of a new high, currently priced at 14% YES, indicating that market participants see potential catalysts in the coming months.

What to Watch

Observers should monitor developments in US-Iran relations, as any escalation or de-escalation could significantly impact oil prices. Key figures such as Mohammad Sanusi Barkindo of OPEC — the producer group whose output decisions shape global supply — and Abdulaziz bin Salman Al Saud, Saudi Arabia's Minister of Energy, whose country is OPEC's largest producer and among the world's biggest oil exporters, may provide insights or policy changes affecting market dynamics. Iran's oil exports have long been constrained by US sanctions, so shifts in sanctions policy or enforcement act directly on available supply. Any new geopolitical developments or economic sanctions affecting oil supply could alter current market expectations. Watch for updates that could either support or deter the probability of oil reaching new peaks.