On the 8th (local time), Brent crude—the global benchmark for oil prices—surpassed $99 per barrel during trading. Concerns over supply disruptions intensified following reports that pro-Iranian Houthi rebels in Yemen attacked Saudi Arabian energy facilities, coupled with reports that the U.S. struck areas near Kharg Island—Iran’s largest oil export hub—as well as oil tankers.
Bank of America (BofA) raised its average Brent crude price forecast for the second half of this year from $76 to $83 yesterday, reflecting ongoing shipping disruptions in the Strait of Hormuz. It also raised its forecast for next year to $75. The base-case scenario assumes a gradual recovery in crude oil flows through the Strait of Hormuz.
However, the situation would change significantly if supply disruptions persist. BofA projected that if the conflict restricting crude oil flows continues through the end of the year, Brent crude would trade between $95 and $120 per barrel. It warned that in a worst-case scenario—where the conflict widens and causes severe damage to key energy infrastructure—prices could surge to as high as $150.
Goldman Sachs also raised its December Brent crude forecast by $5 to $85, reflecting the possibility that maritime shipping disruptions in the Middle East could persist into next year. However, Dan Struiven, co-head of Goldman Sachs’ Global Commodities Research, assessed the recent situation in the Middle East, stating, “The developments of the past few days highlight the risk that maritime shipping disruptions could become more widespread and severe.” He noted that if attacks on ships escalate, oil prices could rise to as high as $120, whereas if crude oil exports from the region normalize, prices could fall to around $80.
Morgan Stanley places greater weight on the possibility that high oil prices will persist for a considerable period. Martin Latz, a global commodities strategist at Morgan Stanley, stated on the 3rd, “We expect it will take well into 2027 for Middle Eastern supply to fully recover,” and forecast an average price of $100 for Brent crude in the fourth quarter. He noted that strategic petroleum reserves, floating crude oil stocks, and sluggish Chinese imports had served as “shock absorbers” that had kept oil prices from rising further, but pointed out that “these buffers have now become thinner.” This means there is less capacity to absorb further supply disruptions.
Some analysts also note that the rise in oil prices has been limited compared to the significant decline in Middle Eastern crude exports. Claudio Galimberti, chief economist at Rystad Energy, analyzed that while crude oil shipments through the Strait of Hormuz have recently fallen below 2 million barrels per day, they have remained at a moving average of 4 million to 5 million barrels per day. He estimated that, given this level of shipments, the fair price for Brent crude is approximately $95.
Increased production outside the Middle East and slowing demand in China are also helping to absorb the shock. Non-OPEC oil-producing countries, including the United States, Canada, and Guyana, are expected to increase crude oil production by 1.4 million barrels per day this year. China, the world’s largest crude oil importer, saw its seaborne crude imports drop from over 11 million barrels per day in February to around 7 million barrels per day in July and August. China’s accumulated crude oil inventories also stand at 1.17 billion barrels, according to Kepler estimates.
In contrast, signals of a supply shortage are much stronger in the spot market, where crude oil is actually bought and sold. David Pipe, chief economist at Argus, assessed that “the physical situation is incredibly tight.” Oman crude futures have surpassed $104 per barrel, while the spot price for Dubai crude has exceeded $105. In particular, he pointed out that the diesel market is sending signals of a severe supply shortage.
The biggest factor determining oil prices once they reach $100 per barrel will be the actual scale of supply disruptions. If navigation through the Strait of Hormuz is restored and further damage to Middle Eastern energy facilities is limited, increased production by non-OPEC countries and slowing Chinese demand could curb price increases. Conversely, Wall Street warns that if attacks on energy facilities and crude oil transportation networks in major oil-producing countries escalate, prices could rise above $120 and, in the worst-case scenario, reach as high as $150.
