Crude Oil Recovers as Middle East Shipping Risks Persist

Crude oil prices moved slightly higher on Wednesday following two consecutive sessions of declines, as market participants balanced hopes of reduced tensions between the US and Iran against continued attacks on tankers in the Strait of Hormuz. At the same time, the US Energy Information Administration (EIA) increased its price projections for crude oil in both 2026 and 2027 for the fourth month in a row.

At the time of writing, January Brent crude futures were trading at $91.91/bbl on Wednesday, up 0.46% from the previous settlement. December WTI futures also edged higher, gaining 0.08% to $86.11/bbl.

The modest recovery came after two straight sessions of losses had taken oil prices to their lowest levels in approximately two months. On Tuesday, Brent briefly slipped below $90/bbl for the first time since August before closing at $91.49/bbl.

De-escalation hopes continue to pressure oil markets

Crude oil prices have faced considerable downward pressure in November as expectations of a possible easing of tensions between the US and Iran have grown.

Recent comments from US President Donald Trump indicating that additional military strikes against Iran may not be necessary strengthened hopes for a diplomatic solution. However, negotiations have made limited progress, while attacks on shipping and energy infrastructure across the Middle East have continued.

Despite the conflict, crude oil shipments from the Persian Gulf have been recovering toward levels seen before the war, adding to the downward pressure on prices. According to Bloomberg, Brent has fallen significantly from a six-month high recorded earlier this month. Nevertheless, the benchmark remains more than 50% higher than at the beginning of the year.

Attacks on tankers keep Strait of Hormuz risks elevated

Despite expectations of a possible reduction in tensions, security concerns remain high in the Strait of Hormuz, a major route for global oil transportation.

Reuters reported that 37 vessels were attacked in October, the highest monthly figure since the conflict started in late February. Incidents have continued into November, with several tankers reportedly coming under attack or catching fire in recent days.

On Tuesday, the United Kingdom Maritime Trade Operations (UKMTO) reported another tanker attack northeast of Lima, Oman. Separately, Iran's Revolutionary Guards Navy said two tankers caught fire after striking naval mines while using an unauthorized route through the strait.

The continued incidents have raised concerns about maritime safety, higher insurance costs and the reliability of recovering oil shipments through the region. Reuters also reported that a drone attack sparked a fire at Russia's Baltic Sea port of Ust-Luga on Wednesday, adding to concerns about potential disruptions to energy infrastructure.

EIA increases 2026 and 2027 oil price projections

Meanwhile, the EIA raised its crude oil price forecasts for the fourth consecutive month, pointing to falling global inventories and ongoing supply and transportation disruptions in the Middle East.

In its November Short-Term Energy Outlook, the agency lifted its average Brent crude forecast for 2026 to $97.44/bbl from the previous estimate of $96.32/bbl. The WTI forecast was also increased slightly, from $88.21/bbl to $88.29/bbl.

For 2027, the EIA raised its Brent projection to $85.78/bbl from $83.74/bbl, while its WTI forecast increased to $80.54/bbl from $79.74/bbl.

Despite the upward revisions, the agency continues to expect oil prices to move lower next year as global production recovers and inventories rebuild. The EIA forecasts that worldwide oil inventories will grow by an average of 3.5 million barrels per day in the first half of 2027. This could push Brent below $90/bbl in the second quarter, with prices expected to average $77/bbl in the final quarter of 2027.

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