Persisting disruptions in the Strait of Hormuz caused by the Iran conflict are further tightening global crude oil supplies, driving oil prices upward. Three major brokerage firms have consequently raised their oil price forecasts. The core rationale behind these upward revisions and the subsequent market trajectory are analyzed, taking into account the geopolitical situation and supply-demand dynamics.
The supply disruptions stemming from the Iran conflict are identified as the primary driver for the increased price expectations. Combined with an already fragile global crude supply structure, oil prices are anticipated to have further room for growth in the short term. The long-term outlook, however, will depend heavily on the conflict's progression and the restoration of production capacity.
Swiss brokerage UBS was the first to adjust its forecast upwards, stating that the crude market is already in a tight state with severely restricted tanker traffic through the Strait of Hormuz. UBS raised its Brent crude forecast to $90 per barrel by the end of June, lowering it to $85 by the end of September and December, and further down to $80 by the end of March 2027. This is primarily based on the near halt of tanker loading activities in the Strait of Hormuz, alternative export routes operating near capacity limits, worsening supply disruptions, and limited global spare production capacity that is insufficient to effectively cover the supply shortfall. Additionally, the coordinated release of 400 million barrels of strategic reserves by the OECD can only partially offset a potential daily production loss of 10 million barrels, failing to fundamentally alleviate the supply tightness.
UBS strategist Jon Gordon emphasized that rising prices for refined products will further support crude oil prices. Diesel, jet fuel, and liquefied petroleum gas prices are likely to remain high, potentially even exceeding crude oil prices. This trend is expected to intensify inflationary pressures in the energy market and influence energy policy adjustments worldwide, thereby indirectly affecting the demand structure for crude oil. The strong correlation between refined product prices and crude oil prices means that elevated refined product prices will, in turn, bolster crude prices, significantly increasing the likelihood of oil prices "remaining higher for longer." Even if transit through the Strait of Hormuz resumes, a rapid return to pre-conflict price levels is considered unlikely.
Barclays estimates that 8 million barrels per day of crude oil production in the Middle East has been shut in, with widespread disruptions also affecting liquid fuels and liquefied natural gas transport. The bank also raised its refining margin forecast by over 110% to $11 per barrel, highlighting the impact of supply disruptions across the entire energy industry chain.
Mizuho Securities from the US similarly increased its oil price projections, raising its 2026 forecasts for Brent and WTI crude by approximately 14% and 12% to $73.25 and $68.25 per barrel, respectively. The institution stated that even short-term supply disruptions can significantly tighten the market. Displaced supply has reduced the anticipated surplus for 2026, making a return to low oil prices highly improbable. According to their calculations, a displacement of 7.1 million barrels per day of crude production in just one month is enough to significantly tighten the market balance, further supporting higher oil prices.
It was added that Mizuho's mention of a significant drop in oil prices to the low $50 range is considered "highly unlikely," a view consistent with the current market structure. A key current market debate is whether the Iran conflict will lead to a long-term structural increase in oil prices. Mizuho believes it is premature to draw definitive conclusions but leans towards an upward trend for prices, which aligns with the general long-term outlook. Furthermore, UBS's view of gold as an effective hedging tool also reflects rising investor demand for safe-haven assets amid current energy market volatility.
Notably, the collective upward revision of oil price forecasts by these three major brokerages is not driven by a single factor but is the result of a confluence of multiple elements, including geopolitical conflict, supply tightening, and limited capacity. The global crude oil market's supply-demand balance was already fragile; the escalating Iran conflict has further intensified pressure on the supply side. While demand faces some uncertainty due to global economic growth rates, the inelastic nature of energy demand in the short term is expected to continue supporting oil prices.
In summary, supply disruptions triggered by the Iran conflict are the dominant factor behind the recent upward revisions in oil price forecasts. The latest projections from the three major brokerages all indicate that oil prices will maintain high levels, with clear upward pressure in the short term. The future trajectory of oil prices is expected to depend primarily on the developments in the Iran conflict, the restoration of shipping through the Strait of Hormuz, and the pace of global production capacity release. There remains potential for further price increases in the short term, while the long-term view requires attention to the gradual restoration of supply-demand balance. Investors should closely monitor changes in the geopolitical landscape and adjustments in brokerage forecasts to strategically navigate investment opportunities in the energy market.