• Bank of America (BAC) raises its H2 2026 Brent forecast to $95 from $83, citing persistent Middle East tensions and shipping disruptions in the Strait of Hormuz.
  • The bank expects Brent to average $80 in 2027, but warns that prolonged supply constraints could push front-month prices above $150.
  • Brent settled at $100.34 on September 21, retreating from last week's highs amid optimism over U.S.-Iran diplomacy, yet remains well above pre-shock levels.

BofA's Revised Call

Bank of America has raised its second-half 2026 Brent crude forecast to $95 per barrel from $83, according to people familiar with the matter, as the bank reassesses the duration of supply disruptions in the Strait of Hormuz. The revision reflects growing concerns that Middle East tensions will persist through year-end, keeping a significant geopolitical risk premium embedded in oil prices.

The bank's analysts now see Brent averaging $80 in 2027, assuming a gradual normalization of flows. However, they caution that a prolonged disruption could send front-month prices above $150 per barrel, a scenario that would require severe and sustained infrastructure damage.

The revised forecast comes as the physical disruption remains serious. Before the conflict, roughly 21 million barrels per day of oil and oil products moved through Hormuz. By late August, Kpler estimated flows had fallen to about 8.6 million bpd, although estimates vary depending on methodology and untracked movements. Despite alternative routes and escorted shipments, Hormuz disruptions are still running 4–8 million barrels per day below pre-war levels.

Market Reaction and Physical Constraints

Brent has retreated from last week's highs but remains extraordinarily elevated. It settled at $100.34 per barrel on September 21, after trading above $107–$109 earlier in the month. West Texas Intermediate settled at $95.78. The immediate catalyst for the pullback was optimism around U.S.-Iran diplomacy at the United Nations and a partial recovery in Saudi shipments.

Saudi Arabia's East-West Pipeline—the main route that can bypass Hormuz—was damaged by drone attacks and temporarily shut. It normally provides an important outlet from the Gulf to the Red Sea, but its interruption compounded the shipping constraint and led to cancellations or postponements of some European deliveries. Riyadh has mitigated some of the loss by selling crude from Ras Tanura for ship-to-ship transfer near Oman. Trade sources cited by Reuters reported roughly 60 million barrels arranged for this route across September and October, helping cool near-term market anxiety.

“What institutional investors like us are really focused on is regulatory stability,” said Andrea Valeri, Blackstone (BX)'s country chairman for Italy, at a recent conference, though his comments referred to broader investment conditions rather than oil specifically. Still, the sentiment underscores how geopolitical risk is reshaping capital allocation decisions across asset classes.

Macro and Policy Implications

The issue is a classic supply shock: restricted transport through a chokepoint and damage to export infrastructure reduce available prompt barrels, raise shipping and insurance costs, and force buyers to compete for alternative supplies. Higher gasoline, diesel, jet-fuel, and petrochemical feedstock costs are feeding through to consumers, while central banks face a tougher trade-off between inflation control and weak growth.

For the United States, the direct macroeconomic effect is moderated by domestic crude production, but households and transport-dependent businesses still face higher retail fuel costs. In Europe and many Asian importers, the exposure is generally greater because import dependence and seaborne shipping needs are higher.

The disruption is inseparable from regional conflict and maritime security. China has reportedly pressed Iran to restrain Houthi attacks on Saudi oil infrastructure, illustrating Beijing's stake as a major energy importer. The United States has said it is working to clear traffic and has characterized the Saudi pipeline outage as temporary, while independent shipping and energy analysts have been more cautious about how quickly normal operations can resume.

Policy responses could include coordinated releases from strategic petroleum reserves, naval escort operations, and diplomatic efforts to restore safe commercial passage. Such measures can relieve short-term physical shortages, but cannot fully substitute for sustained normal transit through Hormuz.

Contrarian Views and Uncertainty

Not all forecasters share BofA's bullish tilt. Goldman Sachs (GS) has reportedly lifted its December 2026 Brent forecast to $85 and sees $80 on average in 2027, while warning that Brent could exceed $120 if Gulf output stays around 4 million bpd below pre-war levels. Allianz Trade (ALV.DE) expects Brent to average about $87 in Q4 2026 and $76 in 2027 if Saudi infrastructure is repaired relatively quickly and Hormuz flows stabilize. It sees prices remaining around $100 if the interruption lasts toward six weeks amid continued shipping instability.

Options markets reflect exceptional uncertainty: Brent $100 at year-end has attracted strong interest, while bets on much lower prices remain active as well. The market-implied path suggests traders still see a plausible diplomatic de-escalation, yet prices remain far above pre-shock levels, indicating that the physical-risk problem is not resolved.

Bank of America is a large U.S. universal bank and financial-services group. Its Global Research division produces macroeconomic, commodity, equity, credit, and geopolitical analysis for institutional clients; the oil forecast in question is a research view, not an operational decision by an oil producer. No significant BofA leadership change or corporate restructuring is implicated by this forecast.

A spokesperson for Bank of America declined to comment on the revised forecast. Saudi Aramco did not immediately respond to a request for comment on pipeline repair timelines.

Correction: An earlier version of this article misstated the pre-war flow volume through the Strait of Hormuz. It was approximately 21 million barrels per day, not 20 million.