Analysts at BMI and Standard Chartered have revised their forecasts for Brent crude, projecting an average of $93 per barrel in 2026, up from $83 previously. This upward revision is driven by evolving geopolitical dynamics, particularly the U.S.-Iran conflict, which has delayed a deal to reopen the Strait of Hormuz. The analysts note that Brent prices have already risen to $107 per barrel in Q4 2026, signaling continued upward pressure.
The market faces significant supply-side challenges, with Gulf exports remaining volatile due to logistical bottlenecks and security risks. Analysts warn that while exports have recovered, estimates of current flows vary widely, with some suggesting a deficit of three million barrels per day. The restart of the East-West pipeline offers some relief, but flows through Hormuz and the Red Sea remain insecure. Attacks in the Strait of Hormuz have further disrupted exports, exacerbating market tightness.
Refiners are also under pressure, with depleted inventories and expectations of prolonged conflict driving increased crude demand. Despite efforts to boost production from Brazil, Guyana, and U.S. shale, these sources are insufficient to offset the deficit without a normalization of Gulf flows. Russian production faces additional challenges from sanctions and Ukrainian attacks, further complicating the supply outlook.
The International Energy Agency (IEA) has supported accelerated oil stock releases to address market disruptions, but analysts caution that these measures may only provide temporary relief. With inventories still low and geopolitical tensions high, prices are expected to remain volatile. The analysts warn that a deal on Hormuz or a diplomatic breakthrough could lead to price declines, while continued conflict or delays could push prices higher.
Overall, the outlook remains uncertain, with risks on both sides. A resolution to the U.S.-Iran conflict could stabilize prices, but ongoing tensions and logistical challenges are likely to keep the market tight in the near term.