Major Investment Banks Sharply Raise Oil Price Forecasts

As the U.S.-Israel war with Iran enters its third week, global investment banks are unanimously raising their oil price forecasts. OCBC and Standard Chartered project that Brent crude will remain near $100 per barrel through mid-2026, while some institutions warn that prices could exceed $150 if the Hormuz Strait blockade persists.

OCBC has raised its Brent crude forecast to approximately $100 per barrel for the year, with expectations of a decline to $70 in early 2027. Emily Ashford, Head of Energy Research at Standard Chartered, stated that "despite optimistic U.S. projections, there is currently no credible path to de-escalation," announcing a significant upward revision of the 2026 average Brent crude forecast from $70 to $85.50 per barrel.

Impact of the Hormuz Strait Blockade

The Strait of Hormuz, through which approximately 20% of global oil and LNG traffic passes, continues to face severe constraints. Ashford analyzed that "Iran remains firmly committed to continuing restrictions on passage through the Strait of Hormuz and attacking military, transportation, and energy infrastructure including regional ports, refineries, oil fields, and vessels."

Brent crude recorded its largest single-day volatility in history on March 9, with intraday swings exceeding $35 per barrel, surging to $119.50—its highest level in 26 months—before currently fluctuating in the $100-105 range. Standard Chartered explained that "it has been an unprecedented three weeks for the energy sector" and "we are raising our price forecasts to reflect supply disruptions that have lasted longer than initially anticipated."

Wall Street's Extreme Scenario Warnings

Some institutions are presenting even more extreme scenarios. Energy consulting firm Wood Mackenzie warned that "$200 per barrel oil is not outside the realm of possibility," while Goldman Sachs forecasts that prices could approach $150 if cargo volume constraints persist.

Such oil price spikes are raising concerns about rekindled global inflation. The U.S. Federal Reserve held its benchmark interest rate steady at 3.5-3.75% at its March FOMC meeting, with Chairman Jerome Powell stating that "inflation is the Fed's top priority this year" and "we are monitoring the impact of the Iran war on economic conditions."

Historical Context of Supply Chain Realignment

Tensions surrounding the Strait of Hormuz are not a new phenomenon. The "Tanker War" occurred during the 1980s Iran-Iraq War, and tensions escalated in 2019 when Iran seized a British tanker. However, this crisis differs from the past in that it occurs at a time when the global energy supply structure has fundamentally changed.

Entering the 2020s, global energy markets were already under pressure to realign supply chains due to decarbonization policies and the Russia-Ukraine war. Following Russia's invasion of Ukraine in 2022, Europe dramatically reduced its dependence on Russian energy and increased its proportion of Middle Eastern crude, further elevating the strategic value of the Strait of Hormuz. The current situation is adding another shockwave to an already unstable global energy landscape.

Future Outlook [AI Analysis]

In the short term, oil prices are likely to remain elevated, reflecting geopolitical risk premiums. Standard Chartered's forecast of $98 for Q2 2026 assumes a scenario where the conflict eases within months, but finding negotiation momentum is difficult as Iran's hardline stance intersects with U.S. military responses.

In the medium term, key variables will include strategic petroleum reserve releases by various countries and whether OPEC+ increases production. U.S. strategic reserves are at historically low levels, limiting capacity for large-scale releases. While OPEC+ has spare production capacity, reaching production increase agreements is likely difficult due to oil-producing nations' interests in capitalizing on the high-price environment.

In the long term, energy security realignment is expected to accelerate. Major countries are likely to expedite renewable energy transitions while strengthening cooperation with non-Middle Eastern oil producers such as Canada and Brazil to reduce Middle East dependence. However, realizing such structural changes is expected to take several years, during which oil price volatility is forecast to remain at elevated levels.