Brent Crude: Supply Risks Keep Prices Elevated – Commerzbank

Brent crude is currently trading near $94.04, with geopolitical risks and structural tightness in refined products jointly underpinning elevated price levels. Commerzbank analyst Barbara Lambrecht notes that tensions surrounding the Strait of Hormuz and low diesel inventories are continuously providing upward momentum for oil prices, allowing them to hold firm amid recent volatility.

**Supply-side risk premium remains priced in**

Concerns over disruptions to key transport routes are the primary sentiment driver sustaining high oil prices. As the world's most critical oil shipping chokepoint, any potential escalation of conflict in the Strait of Hormuz could quickly tighten supply expectations. Meanwhile, tightness in the refined products market, particularly diesel inventories, further strengthens the support logic on the crude side, reflecting structural contradictions in the refining segment transmitting to the feedstock end.

**Significant rebound but below prior highs**

Although Brent crude has recorded a notable rebound of nearly 20% from its early August low, Commerzbank observes that this level remains well below the cyclical peak reached in April. This suggests that while short-term supply risk premiums are elevated, the market has not yet fully priced in extreme disruption scenarios, or that macroeconomic demand concerns are still limiting the absolute upside for price breakthroughs.

**Outlook hinges on geopolitical developments**

In the near term, oil price direction will be highly dependent on the evolving path of Middle East geopolitical tensions. If signs of easing emerge regarding Strait of Hormuz-related tensions, the currently priced risk premium could face a rapid unwinding; conversely, any substantial threat of supply disruption could push prices to challenge the upside resistance zone. The market is closely monitoring signals of next steps from relevant parties.