Bank of America has lifted its forecast for Brent crude for 2026 from $83 a barrel to $95 a barrel.

Oil prices could reach upward of $150 a barrel if inventories continue to deplete as the war in Iran rages on, according to Bank of America.

The New York-headquartered investment bank has raised its year-end forecast for Brent crude from $83 a barrel to a new target of $95 a barrel.

"Although alternative routes and escorted Hormuz shipments have mitigated some of the shortfall, damaged infrastructure and rising geopolitical tensions make rapid normalization unlikely," strategists led by Francisco Blanch, head of global commodities, equity derivatives and cross-asset quantitative investment strategies, wrote in a note released to the media on Tuesday.

It comes as traffic in the Strait of Hormuz - responsible for about a third of the global crude oil trade - has been severely constrained, while Saudi Arabia's energy infrastructure has been targeted by the Iran-backed Houthi rebels, temporarily bringing some operations to a halt.

But, both the global benchmark (BRN00) and the U.S. benchmark (CL00) fell below the $100 and the $90 a barrel marks, respectively, early Tuesday after Reuters reported that the country's oil giant, Saudi Aramco, was resuming work at its East-West pipeline and could restart shipping from the port city of Yanbu on the Red Sea as soon as later today.

The strategists said they expect an average price for Brent crude of about $80 a barrel in 2027, although noted the challenge presented by strategic stockpiles falling and markets pointing to acute shortages in the near-term.

"Despite this tightness, energy prices are still relatively affordable when adjusted for income and inflation, and growth is not slowing down yet," the team wrote. "Thus, if disruptions persist into spring 2027 or oil infrastructure damage intensifies, ICE Brent front month contracts may have to spike well above $150/bbl to curb global oil demand."

BofA estimates that crude-oil disruption in the Strait of Hormuz went from roughly 14 million barrels per day when the U.S. and Israel first started striking Iran, to a recent average of between four and eight million barrels a day.

-Nora Redmond