Introduction#
Oil prices are anticipated to stay above $100 per barrel in the near future, according to analysts from OCBC. This outlook is primarily due to ongoing tensions between the U.S. and Iran, which have not shown signs of resolution.
Impact of U.S.-Iran Conflict#
The conflict has now entered its third week, and there have been no significant diplomatic efforts that could lead to a breakthrough. As a result, oil shipments through the Strait of Hormuz, a crucial passage for global oil transport, are severely restricted. This situation is contributing to tight conditions in the global crude oil market.
Price Forecast#
OCBC analysts predict that Brent crude oil prices will stabilize around $100 per barrel until mid-2026. This is a significant increase from earlier forecasts that estimated prices closer to $70. By early 2027, prices are expected to ease towards $70 as supply disruptions gradually resolve.
Shipping and Supply Challenges#
The ongoing conflict has led to a slowdown in tanker traffic through the Strait of Hormuz, which is responsible for about 20% of global oil consumption. Although some vessels have resumed limited operations, overall oil flows remain significantly below normal levels. OCBC notes that while alternative measures, such as using different pipeline routes and releasing strategic reserves, could help mitigate some supply issues, they would still leave a considerable gap if disruptions continue.
Conclusion#
The current situation in oil markets is approaching a "moderately severe" supply shock. If the tensions between the U.S. and Iran persist, there is a risk that oil prices could rise even further.