Overview
Rising military activity that involves the U.S., Israel and Iran is expected by major banks to exert upward pressure on oil and gas prices, with both HSBC and UBS identifying the Strait of Hormuz as the critical chokepoint. Each bank emphasised that the degree of market disruption will hinge on whether shipping through Hormuz is curtailed and on how long any regional spillover persists.
HSBC assessment
HSBC characterised the oil market risk as "asymmetrical," singling out transit through the Strait of Hormuz as the principal worry. While the bank noted there is significant spare production capacity in the Middle East Gulf, it cautioned that such capacity would be effectively unusable if the strait were to be closed. HSBC also said it has not revised its 2026 Brent price forecast, keeping it at $65 per barrel, but stressed that the eventual impact depends on the duration of hostilities and the extent of regional spillover.
UBS outlook
UBS expects crude oil to rise along the whole forward curve, with the most pronounced moves near the front end. The bank highlighted that around 20% of global oil supply transits the Strait of Hormuz. UBS further warned that damage to regional infrastructure could put roughly 3.3 million barrels per day of Iranian supply at risk. On the natural gas side, UBS said major global benchmarks - JKM, TTF and Henry Hub - are likely to push higher, pointing to potential threats to Qatar's 77 mtpa LNG supply and to the oil-linked pricing structure of some Middle Eastern LNG contracts.
Market-sector implications
In equities, UBS anticipates a generally positive reaction for U.S. exploration and production companies, especially more leveraged oil names. The bank also noted that Canadian integrated producers such as CNQ and CVE are positioned to benefit from higher crude prices. Beyond commodities and equities, HSBC signalled a near-term edge for the U.S. dollar amid elevated geopolitical uncertainty and warned that any renewed conflict could test investor sentiment, economic activity and capital flows in the Gulf.
Shared emphasis
Both banks underscored that market outcomes will be driven by whether the conflict disrupts shipping through the Strait of Hormuz, given the waterway's central role in global energy flows.
Key points
- HSBC calls oil market risk "asymmetrical" and flags Hormuz transit as the main concern; it left its 2026 Brent forecast at $65 per barrel.
- UBS expects crude prices to rise across the curve, with about 20% of global oil supply moving through Hormuz and roughly 3.3 million barrels per day of Iranian supply vulnerable to infrastructure damage.
- UBS sees higher global gas benchmarks (JKM, TTF, Henry Hub) if Qatar's 77 mtpa LNG supply or oil-linked Middle Eastern LNG contracts are threatened; it also expects U.S. E&P and certain Canadian majors to benefit.
Risks and uncertainties
- Disruption of shipping through the Strait of Hormuz - a primary determinant of energy market impact, affecting oil flows and related markets.
- Duration and regional spillover of the conflict - outcomes depend on how long military action persists and whether it spreads within the Gulf.
- Potential damage to regional energy infrastructure - could threaten Iranian output and LNG supply, influencing crude and natural gas benchmarks.