Brent: Higher-for-longer price trajectory – OCBC

OCBC strategists Sim Moh Siong and Christopher Wong note they raise their Brent forecasts, projecting USD100/bbl at end-2026 and USD85/bbl at end-2027 as months of Middle East disruption erode market buffers. Despite recovering Gulf exports, depleted inventories, stretched logistics and persistent shipping risks point to transportation bottlenecks and higher freight costs, reinforcing a higher-for-longer Oil price environment and wider Brent–WTI spreads.

Market buffers running thin

"We raise our end-2026 Brent forecast to USD100/bbl from USD85 and end-2027 to USD85 from USD75. The shift is less about greater conviction on how the US-Iran conflict ends and more about responding to today’s tighter market. Brent remains above USD110/bbl despite a recovery in Gulf exports."

"Escalation is not inevitable, but the market has less capacity to absorb another shock. Months of disruption have drawn down inventories, tightened tanker availability, stretched alternative export routes and depleted refined-product stocks. Renewed attacks on shipping or regional energy infrastructure could therefore have an outsized price impact."

"The bottleneck is increasingly transportation, not production. Longer voyages, security risks and disrupted routes tie up vessels, reducing effective tanker capacity and pushing freight costs higher. Oil may still be flowing, but it is becoming slower and more expensive to move."

"That matters most for refined products. Higher freight costs disrupt trade flows and raise replacement costs, reinforcing tight diesel markets and supporting cracks. For Brent-WTI, higher transatlantic freight can widen the spread as WTI must trade at a deeper discount to remain competitive in Europe."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)