BetaShares Warns Oil Could Hit US$100 as Strait of Hormuz Risks Grow

Brent crude approaches US$100 a barrel as renewed Middle East tensions raise concerns about supply disruptions, inflation and pressure on financial markets

Oil prices are moving sharply higher again, with Brent crude futures reaching US$99.33 a barrel, up 1.45%, as renewed tensions in the Middle East revive concerns about disruptions to global energy supplies. The move brings Brent close to the US$100 mark and back towards its most recent high in July.

For investors, the latest rally highlights how quickly geopolitical developments can influence energy markets. Cameron Gleeson, senior investment strategist at BetaShares, has warned that investors should not become complacent about the possibility of oil returning to US$100 a barrel, particularly while risks around the Strait of Hormuz remain elevated.

Strait of Hormuz remains a key risk

Gleeson said recent comments from US officials may influence energy markets in the short term, but geopolitical risks surrounding the Strait of Hormuz remain difficult to remove. Any temporary disruption to tanker traffic or further escalation in the region could quickly push energy prices higher.

The Strait of Hormuz remains particularly important because disruption to shipping through the region can affect the movement of oil and refined petroleum products. With markets already sensitive to supply risks, even a temporary interruption could create renewed volatility.

Gleeson said oil markets remain highly responsive to developments in the Middle East, leaving investors with limited room for error if supply concerns emerge alongside persistent inflation.

Higher fuel prices could add to inflation

The concern extends beyond crude oil itself. Attacks on refineries in the Middle East and Russia have also contributed to higher prices for products such as gasoline, diesel and jet fuel.

US diesel prices reached US$5.90 a gallon on Monday, their highest level on record, according to Gleeson. Higher refined fuel costs can feed directly into household expenses and business operating costs, creating another potential source of inflationary pressure.

For financial markets, that combination could be particularly challenging. Higher energy prices may push inflation expectations higher, potentially placing further upward pressure on bond yields and increasing uncertainty around future interest-rate settings.

Australian shares face mixed impact

Australian equities would not be immune to these developments, particularly consumer-facing businesses and other parts of the market that are sensitive to borrowing costs and bond yields. Higher energy prices can increase expenses for businesses and households while potentially affecting demand.

However, the impact is not uniformly negative across the Australian market. Australia has significant exposure to resources and energy companies, which could benefit from stronger commodity prices and higher energy-related revenues.

Gleeson noted that global energy companies and royalty companies could provide exposure to real assets and commodity-linked revenues in an environment of higher and more volatile energy prices.

Investors watching US$100 oil

With Brent now at US$99.33 a barrel, the US$100 threshold is once again within sight. The key question for markets is whether geopolitical tensions translate into sustained supply disruptions or whether energy flows remain sufficient to prevent a prolonged price surge.

For investors, the oil market has therefore become an important signal to watch, particularly because a sustained increase in energy prices could have wider implications for inflation, bond yields and equity valuations.

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