Oil's long view darkens as Iran war refuses to end
USO•Brent futures for December 2027 have risen more than 13% since September to $86 a barrel, while December 2026 contracts gained around 12%. Traders are pricing in a risk of prolonged supply disruption despite forecasts for a global surplus next year.
1. Long-dated prices climb
Brent futures for delivery in December 2027 reached $86 a barrel, their highest level, after rising more than 13% since the start of September. December 2026 contracts gained around 12%. The forward curve reflects market participants' willingness to lock in higher prices, rather than a firm forecast.
2. Supply risks persist
The International Energy Agency projects global oil supply will rise to 108.3 million barrels per day in 2027 from 100.7 million this year, while demand is forecast to reach 104.4 million barrels per day. But attacks on vessels and threats to disrupt the Strait of Hormuz have kept supply concerns alive. Security, freight, insurance and military protection now account for nearly a third of the cost of moving Gulf oil, compared with 3% before the war.
3. Diesel tightness adds pressure
European diesel futures hit a record $1,480 per metric ton in mid-September, while December 2027 contracts climbed above $1,000 a ton this week, compared with $644 before the war. The article says diesel price inflation can raise transportation, manufacturing and food costs. US inflation was 3.7% in September, while core inflation was creeping up.
