What will happen to the Brent oil price over the next few quarters?
Analysts at BMI and Standard Chartered have outlined their thoughts on where the commodity is heading in the not-too-distant future in separate reports sent to Rigzone recently.
In a BMI report sent to Rigzone by the Fitch Group on Friday, analysts at BMI, a unit of Fitch Solutions, highlighted that they had made a “significant upward revision” to their Brent forecast and now expect Brent futures to average $93 per barrel in 2026, up from $83 per barrel previously, and $81 per barrel in 2027, up from $71 per barrel previously.
“This assumes growing, if fluctuating, price pressures over the coming three-to-six months, with Brent rising to an average of $107 per barrel in Q4 2026 and $112 per barrel in Q1 2027, up from $91 per barrel in Q3,” the analysts stated in the report.
The analysts noted in the report that their price forecast revision principally reflects their evolving view of the U.S.-Iran war.
“Whereas we had previously expected a preliminary agreement to reopen the Strait of Hormuz in 2026, we now believe that a deal is unlikely before Q1 2027,” they revealed.
“This has seen Brent remain under pressure heading into the fourth quarter, with Brent futures closing at $106.1 per barrel on October 14, significantly above the year-to-date average of $89 per barrel,” they pointed out.
The BMI analysts highlighted that Dated Brent is trading at a “hefty” premium to Brent futures, “averaging $130 per barrel in the first two weeks of the month”, while the futures curve “remains steeply backwardated, both typically indicative of underlying market tightness”.
Gulf Exports
In the report, the analysts noted that Gulf oil exports rose “health[il]y” over Q3 2026 but warned that supply-side risks “remain extremely elevated” and said the market is “grappling with historically unprecedented logistical frictions”, which they said are “feeding into and distorting price action in the oil markets”.
“While Gulf exports have recovered significantly, estimates of current flows vary widely, with the lower estimates pointing to a deficit of around three million barrels per day or more in September,” the analysts said.
“The restart of the East-West pipeline provides some relief, but both Hormuz and Red Sea flows are likely to remain highly insecure through Q4 2026 and Q1 2027,” they added.
“Until a deal is reached, exports will be vulnerable to logistical bottlenecks and renewed attacks on shipping and infrastructure,” they continued.
The analysts stated in the report that this risk has been underscored in early October, “with the rise in attacks in the Strait of Hormuz triggering a multi-million-barrel-per-day decline in exports over recent days”.
“Meanwhile, depleted inventories and expectations of a prolonged conflict will continue encouraging refiners to maximize throughput, increasing the call on scarce crude even as end-use demand growth remains muted,” they said.
“While North American and European [refiners] have been topping out their run rates, global product markets – notably diesel markets – remain extremely tight, with the U.S.-Iran and Russia-Ukraine wars triggering significant outages in Russia and the Middle East and depressing run rates in Asia,” they added.
The BMI analysts warned in the report that, “despite coordinated global stock releases, price pressures downstream will likely remain acute over the next three-to-six months, feeding back into upside pressure on Brent”.
In a statement sent to Rigzone on October 7 by the International Energy Agency (IEA), IEA Executive Director Fatih Birol revealed that, in a meeting that week, IEA member governments “expressed support for accelerating the oil stock releases announced in the Collective Action of March 2026, with a view to completing them as soon as possible”.
A statement posted on the IEA’s website on March 11 announced that the 32 member countries of the organization unanimously agreed to make 400 million barrels of oil from their emergency reserves available to the market “to address disruptions in oil markets stemming from the war in the Middle East”.
Spare Production Capacity
The BMI analysts went on to outline in their report that “the scope for offsetting crude supply growth” in areas other than the Middle East Gulf “remains limited”.
“Outside the Middle East Gulf, spare production capacity has largely been exhausted and the near-term pipeline of greenfield projects is thin,” they said.
“New production from Brazil and Guyana, further recovery in Venezuela and modest gains from U.S. shale will provide some relief, but will be insufficient to plug the lingering deficit, absent a sustained normalization in Gulf flows,” they warned.
“Russian production and exports also remain under pressure from sanctions and Ukrainian attacks, with any partial energy ceasefire facing a high risk of violation and collapse,” they added.
The BMI analysts projected that further strategic stock releases could temporarily ease market tightness but warned that “depleted reserves and operational constraints limit daily flow rates”.
“Under our core scenario, releases and new supply additions will not prevent further global inventory drawdowns,” they said.
“We therefore expect prices to zigzag higher through Q1 2027, as repeated cycles of escalation and diplomacy between Washington and Tehran coincide with progressively lower inventories and fewer fundamental brakes on rallies,” they noted.
“Risks remain wide in both directions: a return to high-intensity warfare or a further delay to a Hormuz agreement would amplify the upside, while a near-term diplomatic breakthrough, stronger Gulf exports or larger coordinated stock releases would pressure prices lower,” they said.
The analysts went on to project in the report that, “once a preliminary deal is reached”, they expect “a sharp sell-off as Gulf exports gradually normalize, with Brent futures falling to an average of $70 per barrel in Q3 2027 and $67 per barrel in Q4”.
They warned, however, that full normalization could take six-to-12 weeks after an agreement is signed, “leaving prices exposed to renewed physical disruption throughout the transition”.
Elevated and Volatile
In a report sent to Rigzone by the Standard Chartered Bank team last week, Standard Chartered Bank Energy Research Head Emily Ashford outlined that the company’s “core” view on the crude oil market is that crude prices will “remain elevated and volatile, with risks still skewed to the upside”.
This report revealed that Standard Chartered Bank sees the ICE Brent nearby future crude oil price averaging $92.00 per barrel overall in 2026 and $89.50 per barrel overall in 2027.
According to the report, Standard Chartered Bank expects the commodity to average $101 per barrel in Q4 2026, $96.00 per barrel in Q1 2027, $91.00 per barrel in Q2, $87.00 per barrel in Q3, and $84.00 in Q4.
“The market is becoming increasingly effective at adapting to disrupted trade routes, limiting the price impact of improving or deteriorating geopolitical headlines alone,” Ashford stated in the section of Standard Chartered Bank’s report outlining the company’s “core view” on crude oil.
“However, recovering export volumes should not be mistaken for normalization: logistics remain costly, product markets are still tight, and strategic and commercial inventories are becoming increasingly depleted,” Ashford added.
“We therefore expect the geopolitical risk premium to ebb and flow, with prices remaining particularly sensitive to evidence of actual supply losses or disruptions,” Ashford warned.
“Improving logistics or diplomatic progress could drive sharp corrections, but rebuilding inventories and restoring normal trade economics are likely to be lengthy processes, keeping the medium-term price floor well above pre-conflict levels,” Ashford went on to state.
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