BofA, Standard Chartered raise Brent price forecast on Strait of Hormuz impasse

By Anmol Choubey

March 16 (Reuters) - Bank of America and Standard Chartered on Monday raised their 2026 oil price forecasts, citing a prolonged supply shock from the shutdown of the Strait of Hormuz and the likelihood of a long‑tail disruption to global energy markets.

Bank of America raised its 2026 Brent crude forecast to $77.50 a barrel from $61 earlier, while Standard Chartered raised its projection to $85.50, from $70 earlier.

The war in Iran has disrupted the Strait of Hormuz, the key shipping lane linking the Persian Gulf to the Arabian Sea. The waterway is vital for global energy flows, carrying around one-fifth of the world’s oil and liquefied natural gas (LNG) supplies.

BofA's commodity research team said in a note its updated view reflects two equally likely paths: a quick resolution that restores flows by April and puts Brent near $70, or a longer disruption spilling into the second quarter that lifts prices toward $85.

BofA said nearly 200 million barrels of crude have already been choked off from the market, tightening inventories far faster than expected.

Standard Chartered also lifted its quarterly projections, raising its Q1, 2026 forecast to $78 from $74, Q2, 2026 to $98 from $67 and now sees 2027 Brent at $77.50.

Standard Chartered estimated 7.4–8.2 million bpd of supply is currently offline across Iraq, Saudi Arabia, the UAE, Qatar and Kuwait, with Iranian output also down by about 1 million bpd.

"Even if the kinetic side of the conflict were to fade, or a ceasefire be declared, there will be a long tail to the energy market disruption, in our view," Standard Chartered said.

Oil prices have surged more than 41% since the conflict began earlier this month, though both benchmarks pulled back on Monday. Brent futures LCOc1 were down 0.5% at $102.69, while U.S. West Texas Intermediate (WTI) crude CLc1 fell 2.7% to $95.94.

The retreat came after the United States said it would be fine with some Iranian, Indian and Chinese ships moving through the Strait of Hormuz and talk of possible additional releases from emergency reserves as part of global efforts to reduce consumer energy prices during the Iran War.

A prolonged conflict into the second half could drive Brent to an "eye-watering" $130, though BofA analysts called that unlikely, adding once the war ends, oil markets likely swing back to surplus, pushing Brent to $65 in 2027.

Meanwhile, with its higher oil price outlook, Bank of America raised its valuations for oil-focused exploration and production companies by about 17%.