Oil prices could hit $90 a barrel this year as tensions in the Middle East escalate, analyst says

Escalating tensions abroad could push oil prices up to around $90 a barrel, one analyst said.

Prices were not too far from those levels on Monday, with Brent (BZ=F) hovering above $86 a barrel while West Texas Intermediate (CL=F) was above $82 a barrel.

“The biggest fear in the market is the greater geopolitical tension we’re seeing in the Middle East,” Andy Lipow, president of Lipow Oil Associates, told Yahoo Finance on Monday.

Escalating tensions between Israel and Lebanon’s Iran-backed Hezbollah have raised concerns that a cross-border conflict could involve Tehran more directly. Iran produces about 3 million barrels of oil a day, or about 3 percent of global output.

“That’s the concern in oil markets because it could lead to a supply disruption across the entire Persian Gulf region,” Lipow said. “Between that and rising demand by the end of the year, I expect Brent crude prices to go back up to about $90 a barrel.”

Rising demand has also pushed up crude prices in recent weeks. Last month, U.S. crude gained 6%.

“The latest price increase has been attributed to lower crude and product inventories, increased demand for truck traffic and air travel,” Dennis Kissler, senior vice president at BOK Financial, said in a recent note.

“Warmer temperatures across much of the United States have also had a positive impact on demand for electricity generation,” he added.

Wall Street widely predicts that slowing demand amid increased supply will drive prices lower next year, with JPMorgan analysts predicting Brent will average $75 in 2025, down sharply from $83 in 2024.

Goldman Sachs kept its target for next year unchanged at an average of $82 a barrel.

Ines Ferre is a senior economics journalist for Yahoo Finance. Follow her on X at @ines_ferre.

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