Brent Crude oil prices are set to end the year at about $105 per barrel, bank ANZ said on Friday as it hiked its projection by $10 a barrel on the assumption that Middle East oil exports, shipping availability, and fuel supplies will remain constrained through December.
“The forecast does not require another geopolitical shock,” ANZ’s strategists wrote in a note carried by Bloomberg.
“Rather, it assumes that the constraints already confronting Middle Eastern exports, shipping and refined-product markets persist through year-end.”
Of course, any escalation in the Middle East would send oil prices even higher, the bank said.
The world is out of buffers to curb new shocks, ANZ notes.
“Eight months of adapting to disrupted Middle Eastern supply have materially weakened the buffers that absorbed the initial shock,” according to the bank’s strategists.
Earlier this week, UBS also raised its Brent Crude forecasts to $110 a barrel at the end of 2026, up from a previous projection of $100 per barrel, amid elevated uncertainty about the Middle East conflict, production and exports from the region, and global oil demand.
Goldman Sachs, for its part, sees Brent at $90 per barrel at the end of this year and an annual average at $80 in 2027, but “the risks to our forecasts are clearly skewed to the upside,” Daan Struyven, co-head of Global Commodities Research and head of Oil Research, said last week.
Goldman estimates the baked-in risk premium in oil at about $27 per barrel for Brent at the moment.
“But for the risk premium to come off quickly, you would probably need to see a diplomatic solution that market participants see as sustainable,” Struyven said.
Oil prices, however, are heading for a fourth consecutive monthly gain on Friday, as the Houthis are escalating attacks on Saudi Arabia and the market braces for a potential new round of U.S.-Israel strikes on Iran.
By Tsvetana Paraskova for Oilprice.com
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