Oil Above $100 Is Here to Stay, Even If the Gulf War Ends

By Nathan Brooks

West Texas Intermediate settled at $102 a barrel on Thursday — and it fell to get there. Three tankers struck mines and caught fire trying to exit the Strait of Hormuz that same day, and the market's reaction was to sell. That's your clearest signal yet that geopolitical risk is already in the price, and that the real story is how hard it will be for crude to get cheap again.

"Reality is settling in," said Bob McNally, president at Rapidan Energy Group and a former energy adviser to President George W. Bush. Oil markets have begun to "shed the entrenched optimism about a quick and durable end to the war disruption."

That optimism peaked around Independence Day, according to McNally. Since then, the market has "priced in decent geopolitical risk" — which caps the upside but, crucially, doesn't do much for the downside. Traders took Thursday's mine reports, first reported by the Associated Press citing Iran's Islamic Revolutionary Guard Corps, "with a grain of salt," said Gary Cunningham, director of market research at Tradition Energy. Buyers booked profits instead, pulling prices back from recent highs.

Why $100 looks sticky

Cunningham's bottom line is blunt: "the $100 level is ours for awhile" — regardless of any new attacks, and maybe even for some time after hostilities ease. His reasoning: "the supply picture is simply too tight."

The numbers back him up. The U.S.-Israel war on Iran, which began in late February, has pushed both benchmarks above the $100 mark — WTI at $102, Brent settling above $110 on Thursday. Brent has now closed above $100 a total of 85 times this year, per Dow Jones Market Data. That's the most time spent above the century line since 2022, the year the Russia-Ukraine war began, when it happened 123 times.

What does this change for anyone buying, selling or budgeting around crude? In short: stop pricing in relief. Three forces are propping up the market even without a fresh flare-up.

• China is coming back. Chinese crude imports have been climbing since hitting a decade-low of 6 million barrels per day in June, according to data from Kpler. More crude has cleared the Strait of Hormuz in the past couple of months, aided by U.S. involvement, said Matt Smith, Kpler's U.S. lead analyst. But Beijing isn't reckless — "China is very savvy and is not charging back into the market, buying crude hand over fist, when prices are in triple digits and freight rates are so high."
• Emergency reserves are tapped out. The global release of strategic oil reserves is almost done, said McNally. That cushion is gone.
• Recovery carries a cost. Flows through the Strait of Hormuz have "impressively recovered" much of their loss, McNally said — but at a high price. Elevated tanker freight rates keep consumer oil prices high even as volumes normalize.

Could a peace deal fix this?

President Donald Trump has repeatedly said oil and gasoline prices will fall quickly once the conflict is over. Louis LaValle, co-founder and chief executive at Frontier Investments, isn't buying it. A deal could bring prices down somewhat, he said, but the market would still face damaged energy facilities and depleted inventories to rebuild.

Trump is "making a return to cheap oil sound much easier than it's likely to be," LaValle said. "That gives us a reason to expect elevated prices for longer, though I'd hesitate to call $100 a hard floor."

So the practical takeaway: plan around triple-digit crude for now, with $100 as a strong gravitational center rather than a guaranteed floor. Any durable downside likely requires rebuilt inventories, repaired infrastructure and normalized freight rates — none of which happens overnight, war or no war.