Brent crude oil prices briefly surged above 100 dollars per barrel on Thursday as escalating geopolitical tensions in the Middle East renewed concerns over disruptions to global energy supplies. The rally followed fresh hostilities between the United States and Iran, coupled with Houthi attacks on commercial shipping in the Red Sea, raising fears over the security of two of the world's most critical oil transit routes, the Strait of Hormuz and the Bab el-Mandeb Strait.

According to a report by Choice Institutional Equities dated July 23, a complete disruption across both chokepoints could affect exports of nearly 18 million barrels per day of crude oil and around 5 million barrels per day of petroleum products. Even after considering additional supplies from alternative producers, the brokerage estimates that the global market could still face an effective crude supply deficit of 11 to 13 million barrels per day.

The report further highlighted that the United States Strategic Petroleum Reserve remains at historically low levels, reducing its capacity to offset another major supply shock. These concerns have pushed the crude oil market further into backwardation, where near-term contracts trade at a premium to longer-dated contracts, reflecting expectations of tighter immediate supplies.

Several global market participants have raised their price outlook for crude oil. Goldman Sachs expects Brent crude to move above 120 dollars per barrel later this year if geopolitical tensions persist and the Strait of Hormuz continues to face disruptions. However, its base case assumes that tensions will gradually ease, while relatively softer demand from China could moderate further upside.

Energy market experts also cautioned that any prolonged disruption to Iranian oil production would significantly tighten global supplies. Analysts noted that the market remains vulnerable due to already constrained Middle Eastern production, low global inventories and limited emergency reserves.

Market participants also warned that the risks extend beyond the Strait of Hormuz. Continued Houthi attacks in the Red Sea have increased threats to Saudi Arabian crude shipments passing through the Bab el-Mandeb Strait, while attacks on shipping activity in the Black Sea have added further uncertainty to global energy markets.

Bhavik Patel, Senior Commodity Research Analyst at Tradebulls Securities, said the near-term outlook for crude oil remains bullish as disruptions have significantly reduced alternative export routes for Middle Eastern crude. He added that while OPEC Plus retains spare production capacity that could eventually stabilise supplies, the current geopolitical environment keeps the near-term risk skewed towards higher crude prices.

Analysts believe that if geopolitical tensions remain elevated and supply disruptions continue across key shipping routes, Brent crude could test the 120 dollars per barrel mark in the coming months, increasing inflationary pressures and energy costs across global economies.