Analysts forecast Brent at $120: a deficit scenario on the horizon for 2026
The oil market is entering a phase of high volatility. Against the backdrop of ongoing tensions in the Middle East and real disruptions in supply through the Strait of Hormuz, Brent prices could soar to $120 per barrel as early as the second half of the year. This means approaching the historical peak of $126.41, recorded on April 30 amid the escalation between the US and Iran.
The key growth drivers are obvious: the escalation of the regional conflict and a sharp decline in exports from the Persian Gulf. Supply volumes have already decreased by more than 45% from pre-war levels. Meanwhile, the baseline scenario suggests that with de-escalation, Brent would return to $80 in the fourth quarter and decline to $75 next year. However, current realities dictate otherwise.
Risks of Route Blockages: Hormuz and the Red Sea
The likelihood of further blockades of the Strait of Hormuz, as well as potential disruptions in the Red Sea, where Houthis threaten to cut off supply routes from Saudi Arabia, shifts the risk balance toward even higher prices. The decline in global inventories makes the market extremely vulnerable to new shocks. Although a slowdown in Chinese imports and demand elasticity may limit growth potential, the current situation resembles the depletion of the reserve buffer, which has previously led to similar forecasts.
My conclusion: The probability of the $120 scenario materializing is extremely high if the conflict drags on. The market underestimates the structural deficit forming against the backdrop of reduced supply and low inventories. Investors should prepare for further volatility.