Analysts are warning consumers to brace for higher for longer oil prices: File Image/Pixabay.

Despite the recent ramping up of oil transit though the Strait of Hormuz and attacks by Iran being largely unsuccessful, the International Energy Agency warned that the global energy market will remain highly vulnerable throughout 2027 – and this contributed to a volatile session of oil trading on Tuesday, with Brent slipping 1.1 percent after touching a five-month high.

IEA executive director Fatih Birol told the Financial Times Energy Transition Summit in London Tuesday, “I don’t see any credible pathway that 2027 will be a year of normalisation,” and the added that the Hormuz was closed once and “can be closed again.”

Birol went on to note that “I’m very worried that there will be some overlapping crises in the Middle East … and it may further escalate the situation, which will have serious implications for energy markets.”

Birol was presumably spooked by Iran signalling that it is prepping for another round of war with the U.S., claiming it has built large stockpiles of new weapons ready to be unleashed on targets beyond the region; and U.S. president Donald Trump earlier announcing that his department of war was developing new strike plans that could include using the “Mother of All Bombs.”

He said, “This is just an extremely large bomb; it’s like a tiny nuclear bomb, but the mother of all bombs is one big bomb, but it’s not nuclear.”

Deutsche Bank analysts on Tuesday sided with Birol, stating in a note that prices for advanced oil contracts dated for next year hitting record highs implied “an extended period of high oil prices deep into 2027.”

Peter Boockvar, chief investment officer of OnePoint BFG Wealth Partners, added, “The 2027 contracts are moving higher as well as the possible reality of higher for longer oil prices sink in.”

In other oil news on Tuesday, the European Union reaffirmed its opposition to Arctic oil and gas development, even though its members are facing another winter of depleted storage and sky-high prices.

The European Commission's new Arctic strategy aims to keep reserves in the ground for the sake of preventing hydrocarbon developments that “threaten” the Arctic ecosystem.