Societe Generale analysts Michael Haigh, Ben Hoff, and Jeremy Sellem have revised their outlook for Brent crude oil, citing the deepening US–Israel–Iran confrontation as a key driver for a 'higher-for-longer' price regime. The conflict has delayed the reopening of the Strait of Hormuz, now expected to extend into April, resulting in a massive supply deficit and slow recovery in Gulf output and shipping. Early trading saw Brent surge to over $116 per barrel following President Trump's statement, 'he wants to take the oil in Iran' [1].
The analysts' central scenario assumes a two-month closure of the Strait of Hormuz, leading to lasting supply damage. OPEC losses are projected at 15 million barrels per day (mb/d) in March, with adjustments in April resulting in an eventual deficit of 8 mb/d by mid to late month. GCC output is expected to be down by up to 3 mb/d through year-end, and Iran is anticipated to lose 2 mb/d of export capacity for the remainder of 2026. Additional OPEC supply is forecast to return gradually from May, supported by G7 SPR flows and resumed Chinese buying [1].
Brent prices are expected to spike in April, averaging around $125 per barrel with credible upside towards $150 per barrel, before easing to approximately $80 per barrel by December. Rapid inventory draws mean stocks are only projected to return to five-year averages by year-end, prompting Societe Generale to lift its 2026 year-end Brent forecast from $65 per barrel to $80 per barrel. The market is described as structurally tighter, more fragile, and highly sensitive to further shocks [1].
CONCLUSION
Societe Generale's analysis points to a sustained period of elevated Brent oil prices driven by geopolitical tensions and supply disruptions. The forecasted supply deficits and slow recovery underscore a structurally tighter market, with prices expected to remain volatile and sensitive to further shocks. Investors and market participants should prepare for continued price strength and heightened risk in the oil sector.