Analysts at OCBC said oil prices are expected to stay above $100 per barrel in the near term because there are scant indications of de-escalation in the U.S.-Iran conflict. In a note, the bank described the situation as having entered its third week without a credible diplomatic breakthrough, leaving shipments through the Strait of Hormuz heavily constrained and global crude supplies tight.
Outlook for prices
OCBC's commodity strategists projected that Brent crude will hold around $100 per barrel through mid-2026, a substantial upward revision from previous forecasts near $70. The bank anticipates a gradual easing toward $70 by early 2027, contingent on disruptions subsiding over time.
“Persistent shipping paralysis is forcing Gulf producers into output shut-ins, raising the risk that temporary disruptions evolve into longer-lasting supply losses,” OCBC’s commodity strategists said.
Supply dynamics and shipping
The note highlighted that tanker traffic through the Strait of Hormuz has slowed to a trickle as a result of heightened security risks. That waterway is a crucial artery for global energy flows - OCBC noted it accounts for roughly a fifth of worldwide oil consumption - and the curtailment of shipments is keeping markets tight.
While some vessels have resumed limited transit after undergoing Iranian checks, and there have been signals about potential inventory releases from the International Energy Agency, OCBC emphasized that overall flows remain well below normal levels.
Mitigation and remaining gaps
OCBC listed mitigating measures that could partially alleviate the shortfall, including the use of alternative pipeline routes, releases from strategic petroleum reserves, and continued Iranian exports. The bank said those measures could offset up to 10 million barrels per day, but warned that even with such actions a meaningful supply gap would persist if a disruption were to be prolonged.
Given these conditions, OCBC concluded that oil markets are approaching what it characterizes as a "moderately severe" supply shock, and that risks are skewed toward further upside in prices if tensions continue.
Summary
The combination of limited signs of de-escalation in the U.S.-Iran conflict, sharply reduced tanker traffic through the Strait of Hormuz, and only partial mitigation from alternate measures supports OCBC's view that Brent will remain around $100 per barrel through mid-2026 before easing toward $70 by early 2027.