Brent crude is near $90 a barrel as tanker transits through the Strait of Hormuz collapse and the US-Iran interim deal expires. Here’s what it means for global energy costs.

Oil prices are climbing again as one of the world’s most important energy chokepoints grinds nearly to a halt. Per IranWire, Brent crude climbed to $89.40 a barrel in Monday, August 17 trading, driven by fading hopes for renewed US-Iran talks and a sharp drop in Strait of Hormuz tanker traffic. Shipping analytics firm Kpler data cited in the same report shows only five cargo vessels transited the strait on one Saturday, with zero on Sunday — down from 31 the previous weekend.

Key Takeaways

• Brent crude climbed to $89.40 a barrel on August 17 as tanker transits through the Strait of Hormuz collapsed to near zero.
• Only five cargo vessels crossed the strait on one recent Saturday, and zero on Sunday, versus 31 the previous weekend.
• The interim US-Iran memorandum of understanding, which set a 60-day negotiating window, has expired without a permanent agreement.
• The EIA does not expect Middle East oil production to return to near pre-conflict levels until early 2027.
• Gulf producers, including Saudi Arabia, are increasingly rerouting crude through alternative loading points to bypass the strait.

The immediate trigger is the expiration of the interim framework that had briefly stabilized the situation. Per TradingEconomics, crude rose above $85 a barrel as President Trump said Washington was not currently holding or planning talks with Tehran, while confirming a naval blockade remains in place — even as he claimed the strait was open and mines cleared. The same report notes a vessel was attacked while leaving the strait, suffering engine-room damage and a crew casualty, and that the memorandum of understanding signed in June — meant to give both sides 60 days to negotiate a longer-term deal — officially expired without a follow-on agreement.

The scale of the disruption is historic. Per Al Jazeera, shipping through the strait — a conduit for about one-fifth of global oil supply before the war — has effectively collapsed since the conflict began in late February, prompting the largest energy disruption in recorded history; between eight and 15 vessels crossed on August 4-6, versus roughly 130 transits before the conflict, according to ship-tracker MarineTraffic.

Iranian Foreign Minister Abbas Araghchi has tied any reopening to conditions Washington hasn’t met, including sanctions relief and war reparations, per the same Al Jazeera report. A separate CNBC report details a restrictive draft plan Iranian state media published for strait traffic — banning US and Israeli vessels outright and penalizing others at 20% of cargo value — even as Iran and Oman continued separately negotiating a managed-transit arrangement.

The price path has been genuinely volatile rather than a one-way spike. Per a CNBC analysis, Brent fell more than 7% in one week following signals of an imminent deal that then failed to materialize, before rebounding as attacks resumed. CNBC’s most recent update notes both major contracts gained more than 5% in the most recent week following attacks on ADNOC-operated tankers in the strait and a Saudi Aramco refinery, with a Phillip Nova analyst noting prices “have now rebounded almost completely from the lows seen in early August” as hopes for a lasting resolution fade.

Gulf producers are adapting rather than absorbing the disruption passively. The same Al Jazeera reporting notes Saudi Arabia has begun offering crude sourced from outside the chokepoint, following a pattern the UAE established earlier, while the EIA’s latest outlook — cited by Yahoo Finance — does not expect Middle East oil production to return to near pre-conflict levels until early 2027, forecasting Brent to average $79 a barrel for 2026, up sharply from a pre-conflict $58 forecast.

Why It Matters

Every day the strait remains constrained adds cost to energy-importing economies across the nine markets this operation covers, most directly Pakistan, Singapore and the UK, all of which import the bulk of their energy. It also directly explains part of the Bank of England’s rate-hold calculus detailed in Article 3.

Data and Evidence

• Brent crude: $89.40/barrel (Aug 17); recent trading above $85-90 range
• Strait transits: as low as 0 vessels on some days, versus ~130/day pre-conflict
• Pre-war share of global oil flows through Hormuz: approximately one-fifth
• EIA 2026 Brent forecast: $79/barrel average, up from a pre-conflict $58 estimate

Global Impact

Beyond direct energy-import costs, prolonged Hormuz disruption raises shipping insurance premiums globally and adds to inflation risk for every economy in this nine-market portfolio — a throughline connecting this story to the UK rate story, Pakistan’s inflation outlook, and global aviation fuel costs (Article 12).

What Happens Next

Watch for whether Iran and Oman finalize a managed-transit arrangement, and whether Washington re-engages given Trump’s stated reluctance to extend the interim deal. The EIA’s early-2027 normalization timeline is the baseline scenario barring a breakthrough.

Frequently Asked Questions

Why did oil prices rise again in August?

Tanker transits through the Strait of Hormuz collapsed toward zero as the US-Iran interim deal expired without a follow-on agreement.

Is the Strait of Hormuz fully closed?

Not officially, but transit volumes have fallen to a small fraction of pre-conflict levels on many days.

When might the situation normalize?

The EIA doesn’t expect near-pre-conflict production levels until early 2027.

Are alternative routes available?

Saudi Arabia and the UAE have begun rerouting some crude through non-strait loading points. How much oil normally flows through Hormuz?

About one-fifth of global oil supply before the conflict began.

A new Reuters poll shows 90% of economists expect the BoE to hold rates at 3.75% for the rest of 2026 — up from 83% last month. Here’s why the consensus hardened.

The Bank of England looks set to sit tight for the rest of 2026, and the consensus behind that view is getting stronger, not weaker. Per Investing.com’s coverage of the Reuters poll, the Bank will leave rates unchanged at 3.75% for the rest of the year according to a strong majority of economists, who have held that view since the war began in late February. Nearly 90% — 56 of 64 respondents — now expect no change through year-end, up from 83% last month, with six expecting a hike and two a cut; no one in the poll, conducted August 13–18, expects a September move.

Key Takeaways

• A Reuters poll of 64 economists (Aug 13–18) shows 56 now expect the BoE to hold Bank Rate at 3.75% through year-end — 90%, up from 83% last month.
• No economist in the poll expects a rate change at the September MPC meeting.
• The consensus has held since the US-Israeli war on Iran began in late February, with little evidence yet of energy-price spillover into the broader economy.
• Markets remain slightly more hawkish than economists, still pricing some chance of a rise by year-end.
• The BoE’s own guidance flags rising Q3/Q4 inflation risk tied specifically to Middle East energy prices.

The consensus is driven less by domestic demand and more by an external variable the Bank has flagged repeatedly. Per the same Reuters poll coverage, the UK economy has stayed mostly resilient since the war began, with little evidence of energy-price spillover into the broader economy — giving the Bank room to stay on the sidelines.

That resilience is fragile by the Bank’s own admission. According to an August 2026 review from Hanbury Wealth, the MPC voted six-to-three at its July 30 meeting to hold at 3.75%, with policymakers signaling rates could rise if Middle East-linked inflationary pressure intensifies; Governor Andrew Bailey said inflation had fallen faster than expected, but the conflict continues to mean high and volatile energy prices that will push inflation back up later in the year. The Bank’s own trajectory reflects this: per the House of Commons Library’s inflation briefing, based on mid-June energy pricing, the Bank projected CPI at “a little under 3%” in Q3 2026 and “a little over 3¼%” in Q4 — a downgrade from its April forecast.

There’s a genuine two-sided risk the poll’s headline framing tends to flatten. On the downside for inflation, the same House of Commons briefing notes that if Middle East energy disruption proves short-lived and oil and gas prices decline, inflation could instead fall from a September 2026 peak toward the Bank’s 2% target by Q2 2027. On the upside risk, HSBC UK economist Elizabeth Martins told Reuters (via Investing.com) that “a big rebound in energy prices would certainly change things.”

Markets aren’t as settled as the economist consensus: per the same poll coverage, financial markets are still pricing in one quarter-point rate rise by year-end — a genuine gap between what economists expect and what traders are hedging against, reported by outlets as two separate data points rather than connected explicitly.

Underlying data support a “resilient but fragile” framing. A KPMG-cited economic overview from Opus Business Advisory Group shows GDP grew 0.7% in the three months to May, slightly down from 0.8% in April, while core inflation fell more than expected in the twelve months to June, reaching its lowest rate since March 2025 — evidence the disinflation trend independent of energy hasn’t reversed. Separately, the House of Commons Library data shows food price inflation eased to 1.7% in June, its lowest since August 2024, reinforcing that the risk is concentrated in energy rather than broad-based prices.

Why It Matters

For borrowers, a prolonged hold at 3.75% keeps mortgage costs elevated relative to sharper-cut scenarios floated earlier in the year. For savers, it sustains relatively attractive cash returns. For the government, Opus’s review notes Prime Minister Andy Burnham has pledged a £2 bus-fare cap and removal of VAT from household electricity bills from October while maintaining existing fiscal rules and avoiding tax rises — a combination that gets harder to fund if borrowing costs stay elevated through year-end.

Data and Evidence

• Bank Rate: held at 3.75% since the July 30 MPC vote (6-3)
• Reuters poll: 56 of 64 economists (90%) expect no change through year-end, up from 83% last month
• BoE inflation forecast: ~3% Q3 2026, ~3.25%+ Q4 2026
• GDP growth: 0.7% in the three months to May 2026
• Food inflation: 1.7% in June 2026, lowest since August 2024

Global Impact

A UK central bank holding firm against energy-driven inflation risk is a data point other energy-importing economies — including Pakistan and much of South and Southeast Asia — are watching as a template for treating Middle East-linked price shocks as transitory.

What Happens Next

The next live decision point is the September MPC meeting, where the poll shows unanimous expectation of no change. The Q3/Q4 inflation prints will show whether the Bank’s own ~3.25% forecast materializes — and whether the hold consensus survives contact with that data.

Frequently Asked Questions

What is the UK’s current interest rate?

3.75%, unchanged since July 30, 2026.

Why isn’t the BoE cutting further?

Concern that Middle East-driven energy prices could push inflation back up in H2 2026.

Will UK mortgage rates change soon?

Based on the current poll, no near-term move is expected.

What would change the outlook?

A significant rebound — or further de-escalation — in Middle East energy prices.

Do markets agree with economists?

Not entirely — traders still price some chance of a year-end rate rise.

Few major assets have had a more turbulent 2026 than gold. After setting an all-time record above $5,600 an ounce in January, the metal plunged more than 20% through the second quarter in its worst quarterly performance since 2013 — only to stage a sharp rebound back toward $4,500 in August as markets pivoted from inflation fear to rate-cut optimism.

The Round Trip in Numbers

Gold reached a record high of $5,626.80 per ounce on COMEX on January 29, 2026, a milestone that would have seemed implausible to most forecasters just a couple of years earlier. From there, the metal fell roughly 22% to 24% through the second quarter — its weakest quarterly performance since 2013 — bottoming at $3,955.40 on June 30 on a daily continuous futures basis.

The rebound that followed has been just as sharp. Gold moved back toward $4,500 on August 11, with COMEX December futures trading at $4,420 as of August 10, while silver approached $85 an ounce in a parallel rally. Separately, spot gold surged above $4,400, briefly touching $4,500 on futures, after the latest US Consumer Price Index report came in cooler than analysts had anticipated, dampening expectations for near-term Fed tightening.

What Explains the Whiplash

The narrative driving gold has shifted at least twice this year, according to market analysts. The initial January peak was built on safe-haven demand tied to the outbreak of the Iran war; the second-quarter selloff reflected a pivot toward inflation and rate fears, as the war pushed oil prices and inflation expectations higher, shifting attention toward a potentially more hawkish Federal Reserve and higher real interest rates — both of which weigh on non-yielding assets like gold. The August rebound reflects yet another pivot, this time toward renewed expectations for easier monetary policy as the inflation shock has begun to fade.

Analysts consistently point to real interest rates as the single variable to watch: both the Q2 selloff and the August rebound can be traced back to changing expectations for real rates, making them the central driver of gold’s next move.

The Central Bank Floor

Underpinning the entire 2026 story has been sustained, structural central bank demand that has helped prevent gold’s correction from becoming a rout. Central banks purchased a net 244 tonnes of gold in the first quarter of 2026, spending a record $37 billion for a single quarter, even as prices fell 12% from their January peak — with 68% of central banks surveyed indicating plans to further increase their gold holdings in 2026. Retail investors mirrored that conviction: bar and coin demand jumped 42% to 474 tonnes, the second-highest quarterly figure on record, pushing total quarterly gold demand value to $193 billion.

China has been a particularly consistent buyer as part of a broader strategic push to diversify reserves away from the US dollar, reporting increases in its official gold reserves for nine consecutive months as of the most recent reading — the 15th straight year of expanding holdings as reported in earlier cycles of this structural trend. Morgan Stanley Research has noted a genuinely historic milestone in this shift: gold now accounts for a larger share of central bank reserves than US Treasuries for the first time since 1996.

What Wall Street Sees Next

Forecasts remain broadly bullish despite the year’s volatility. HSBC predicts gold will average $4,560 in 2026, Goldman Sachs forecasts $4,900 by year-end, and Deutsche Bank expects an average of $4,800 in the fourth quarter. JPMorgan has staked out the most bullish position among major banks, and analysts note it is genuinely difficult to find a bearish institutional forecast for the metal at current levels — a rare degree of consensus optimism even after a year that already delivered both a record high and a brutal correction.

Key Takeaways

• Gold hit a record $5,626.80 an ounce on January 29, 2026, before falling roughly 22-24% through Q2, its worst quarterly performance since 2013.
• The metal rebounded to near $4,500 in August as cooler US inflation data revived Fed rate-cut expectations.
• Central banks bought a record $37 billion worth of gold in Q1 2026 alone, with 68% planning further increases this year.
• Gold now represents a larger share of central bank reserves than US Treasuries for the first time since 1996.
• Major banks including HSBC, Goldman Sachs, and Deutsche Bank all forecast higher average prices for the remainder of 2026.

Frequently Asked Questions

What was gold’s record high price in 2026? Gold hit a record high of $5,626.80 per ounce on COMEX futures on January 29, 2026, before falling sharply through the second quarter.

Why did gold prices crash in the second quarter of 2026? Gold fell roughly 22-24% during Q2 2026 as inflation fears tied to the Iran war shifted attention toward a potentially more hawkish Federal Reserve and higher real interest rates, which weigh on non-yielding assets like gold.

Why is gold rebounding in August 2026? A cooler-than-expected US CPI report dampened expectations for Fed tightening, while sustained central bank buying has provided a structural floor under prices, helping gold rebound toward $4,500.