Brent crude is approaching the $100 mark! RBC warns: War has entered a dangerous stage, and oil prices may break the historical peak of $146 from 2008.

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Brent crude is rapidly approaching the $100 per barrel mark, as the escalating turmoil in the Middle East is pushing the global energy market to its most dangerous edge in decades.

On Thursday, Brent crude futures rose nearly 5% in a single day, reaching $98.70 per barrel during trading. Previously, the Houthi forces joined the fight, threatening a blockade of the vital maritime route—the Bab el-Mandeb Strait—while the Strait of Hormuz remains partially obstructed. The simultaneous pressure on these two key chokepoints has sharply increased the market’s risk premium.

Helima Croft, Global Head of Commodity Strategy at RBC Capital Markets, warned, "The war is entering a dangerous phase, the Red Sea and key infrastructure are at risk," and pointed out that oil prices could break through the 2022 Russia-Ukraine conflict peak of $128 per barrel, and even challenge the historical high of $146 in 2008.

This surge in oil prices comes at a time when global oil buffer inventories have been significantly depleted; reports say Cushing crude stockpiles are close to "tank bottom" levels, leaving the market with almost no capacity to absorb a sustained supply shock. Meanwhile, the average national price of regular gasoline in the U.S. surpassed $4 per gallon on Monday, further increasing the political pressure on the Trump administration to push Gulf diplomatic mediation.

Dual chokepoints under simultaneous pressure, supply risks rapidly escalate

The immediate trigger for the oil price surge was the Houthis’ renewed intervention in Red Sea shipping.

According to Xinhua News Agency, the Yemeni Houthis announced in the early morning of the 23rd local time that they had attacked two Saudi oil tankers in the Red Sea, claiming the vessels violated the group’s recently declared maritime embargo. News of the attack sent Brent crude surging above $95 in after-hours trading.

By Thursday, as the war risk premium continued to accumulate, oil prices further rose to $98.70.

Currently, tankers have once again diverted from the southern Red Sea route; the brief recovery in shipping traffic after the 2023 Houthi incidents has come under threat of reversal. Meanwhile, partial blockage of the Strait of Hormuz remains unresolved, with both of the world’s most important energy routes thrown into chaos, sharply tightening supply expectations.

Saudi Arabia has sent a strong signal, stating it will respond forcefully to any attacks targeting its tankers or onshore energy infrastructure, further heightening the risk of escalation.

RBC: In the worst case, oil prices could break the 2008 record high

Helima Croft’s Thursday report to clients used unusually strong language, noting that although Brent crude has risen over 30% since July 1, current prices are “a lagging indicator of extreme regional stress.”

Croft stated that given the ongoing dangerous escalation, oil prices could potentially break the $128 per barrel high reached during the 2022 Russia-Ukraine conflict; in the worst case of a full-scale regional war, they could even challenge the 2008 historical peak of $146.

She pointed out the far-reaching impact of the Houthis’ involvement: The participation of the Houthis could undermine the effectiveness of the East-West pipeline alternative, expanding supply losses caused by the conflict.

Saudi Arabia previously used the East-West pipeline with a daily capacity of 7 million barrels to bypass the Strait of Hormuz and export oil from the Red Sea. However, if Bab el-Mandeb also becomes impassable, this alternative route loses its meaning, tankers bound for Asia will have to route around Cape of Good Hope, sharply increasing freight costs and causing delivery delays of several weeks, which would further tighten physical market supply.

Goldman Sachs also warns: $120 could be the fourth quarter scenario

RBC is not the only institution sounding the alarm.

According to reports, Goldman Sachs commodity expert Daan Struyven warned on Monday that if disruption in the Strait of Hormuz persists, Brent crude futures could surge above $120 per barrel in Q4. He noted this is not their base case scenario.

Both institutions’ statements together outline the current market risk map: the base case is already severe, while tail risks are even more extreme.

Inventory crisis and political pressure, Trump’s diplomatic room narrows

Worries deepened as this supply shock occurred while the global oil safety cushion had already been severely depleted. Reports say Cushing crude inventories are near “tank bottom”, leaving almost no buffer to absorb a prolonged supply disruption.

On the demand side, the average price of regular gasoline in the U.S. crossed $4 per gallon on Monday—a politically sensitive indicator that is increasing internal pressure within the Trump administration. Analysts believe that once the U.S. military strikes sufficiently degrade Iran's missile and drone capabilities threatening commercial shipping, oil price pressures will push Washington to again seek diplomatic solutions.

From the supply scale, the risks are serious. The Strait of Hormuz carries about one-fifth of global oil supply; under normal circumstances, 8 to 9 million barrels per day pass through the Bab el-Mandeb Strait. If both routes are paralyzed, the global energy market will face an unprecedented supply stress test.

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