Oil prices are expected to stay above the $100 per barrel mark in the near term, as tensions between the United States and Iran show little sign of easing, according to analysts at OCBC.
Oil market tight as Iran conflict drags on
The bank noted that the conflict has now entered its third week without any meaningful diplomatic progress. As a result, oil flows through the critical Strait of Hormuz remain heavily restricted, keeping global crude supply tight.
This ongoing disruption has significantly impacted energy markets, as the strait is a vital route for global oil shipments.
Brent crude forecast raised sharply
OCBC analysts now project that Brent crude will remain near $100 per barrel through mid-2026. This marks a substantial upward revision from earlier estimates of around $70.
Prices are expected to gradually ease back toward $70 by early 2027, assuming supply disruptions begin to fade over time.
Supply risks increase amid shipping disruptions
According to OCBC, continued shipping constraints are forcing oil producers in the Gulf region to cut output. This raises the risk that short-term disruptions could turn into longer-lasting supply shortages.
Tanker traffic through the Strait of Hormuz has slowed dramatically due to heightened security concerns, effectively disrupting a route that accounts for nearly 20% of global oil consumption.
Limited relief measures in place
Although some vessels have resumed limited operations following inspections by Iranian authorities, overall shipping activity remains well below normal levels.
OCBC added that alternative supply measures—such as rerouting pipelines, releasing strategic reserves, and maintaining Iranian exports—could offset up to 10 million barrels per day. However, this would still leave a considerable supply shortfall if disruptions persist.
Upside risks remain for oil prices
The bank warned that the oil market is approaching a “moderately severe” supply shock scenario. If geopolitical tensions continue, risks are skewed toward further price increases.
