Analysts predict Brent could surge to $120: The Strait of Hormuz is the main threat
The energy market is on the verge of serious volatility. My analysis of the current geopolitical situation and supply data indicates that we could see Brent at $120 per barrel as early as the second half of the year. This would bring prices close to the historical high of $126.41, recorded on April 30 at the peak of the escalation between the US and Iran.
The key factor driving the rise is the prolonged disruption of supplies through the Strait of Hormuz. Export volumes from the Persian Gulf have fallen by more than 45% from pre-war levels. The escalation in the Middle East and the effective blockade of this key sea route are creating a supply deficit that the market cannot quickly compensate for.
Base scenario: correction or a new shock?
The baseline forecast suggests that with a de-escalation of the conflict, Brent will stabilize around $80 in the fourth quarter and decline to $75 next year. However, this scenario looks overly optimistic. The ceasefire attempts, which cooled the rise to $88.47, are temporary. The risks of a blockade not only of Hormuz but also of routes in the Red Sea, where the Houthis threaten to cut off supplies from Saudi Arabia, shift the balance in favor of further price increases.
Demand dynamics and inventories
The decline in global inventories makes the market extremely vulnerable. Slowing imports into China and demand elasticity may limit growth potential, but they do not eliminate the fundamental deficit. The depletion of reserve stocks, which analysts previously warned about, only intensifies pressure on prices.
Against this backdrop, special attention should be paid to the diesel market. A shortage of this type of fuel, problems at refineries, and a high probability of rising gas prices create additional risks. I recommend looking at long positions on the spread between December 2026 and March 2027 in the European diesel market—this could serve as a protective asset in times of uncertainty.
My expert opinion: The market underestimates the likelihood of a prolonged conflict. Even a short-term ceasefire will not solve the logistics problem, and restoring supplies will take months. The $120 level is not just a forecast but a realistic assessment of the risk already being priced in. Investors should hedge against further volatility growth.