• Bank of America (BAC)'s Francisco Blanch says Brent crude's baseline outlook is around $90 per barrel, with higher risks if tensions around Iran persist.
  • Tight global supply and disruptions in the Strait of Hormuz are already creating a significant deficit, supporting higher-for-longer oil prices.
  • In more severe scenarios, Blanch sees prices rising toward $120–$130 if the blockade continues or conflict escalates, underscoring risks of prolonged energy market stress.

Oil Markets on Edge

Brent crude has been bid sharply higher as rising tensions involving Iran and disruptions in the Strait of Hormuz tighten global supply. The waterway, a chokepoint for a substantial share of seaborne oil, has seen reduced flows after exchanges of fire and effective blockades in recent weeks, pushing Brent into the $90–$105 range at points this spring.

Now, Francisco Blanch, commodity strategist at Bank of America, warns that the disruptions have removed the prior global surplus and put the market on a tighter footing. “We see a baseline of around $90 per barrel, but the risks are skewed to the upside,” Blanch said. “If the Strait remains restricted, Brent could hit $120 to $130.”

A Market in Deficit

The supply shortfall is already material. Physical and paper markets have tightened, with larger risk premia for shipping through the Gulf. Traders are repricing hedges, and the market is bracing for sustained higher prices. “You have an effective reduction in flows, and that’s creating a deficit that wasn’t there before,” Blanch added.

Other major banks have also revised forecasts upward. ANZ and the World Bank have issued adverse scenarios, while Goldman Sachs (GS) has offered differing quarter-specific figures, reflecting wide uncertainty.

Implications for Consumers and Businesses

For consumers, higher crude prices mean pricier petrol, diesel, and jet fuel, hitting lower-income households and energy-intensive industries hardest. Airlines in particular face large jet-fuel cost increases, and transport and logistics companies see margin pressure. Calls for government intervention — including strategic petroleum reserve releases — are growing.

Bank of America’s analysis suggests that if the Strait remains restricted for weeks or months, the price trajectory could steepen further. In extreme escalation scenarios, some forecasts extend even higher, though Blanch’s upper bound remains around $130 for now.

Political and Diplomatic Drivers

The immediate trigger is military friction between Iran and Western partners over Gulf navigation. Diplomatic efforts to reopen routes are ongoing, but policy choices — escalation versus containment — will directly affect supply risk premia. Prolonged confrontation could push importers to accelerate SPR draws or seek alternative sources.

“This isn’t just a flash in the pan,” Blanch said. “The longer this goes on, the more it becomes a structural supply issue.”

Bank of America reached for comment declined to provide additional detail beyond Blanch’s published remarks.