Societe Generale has revised its oil outlook, warning that Brent crude could spike towards $150 per barrel in a scenario where the Strait of Hormuz is shut for two months, citing large OPEC losses, tight inventories, and limited demand destruction. The bank has raised its 2026 year-end Brent forecast to $80 per barrel from $65 per barrel, assuming OPEC losses of 15 million barrels per day in March and an eventual deficit of 8 million barrels per day by mid/late month. GCC output is projected to be down by up to 3 million barrels per day through year-end, with Iran losing 2 million barrels per day of export capacity for the rest of 2026. Additional OPEC supply is expected to return gradually from May, alongside G7 SPR flows and resumed Chinese buying. Prices are forecasted to spike in April, averaging around $125 per barrel with upside risk to $150 per barrel, before easing to approximately $80 per barrel by December. Demand is expected to rise towards 106 million barrels per day, keeping days-cover below five-year norms and reinforcing a structurally tight market. Some demand destruction is occurring, but inventories are not expected to return to five-year norms until year-end [1].
MUFG's Senior Currency Analyst Michael Wan notes that Brent and WTI prices have surged, with Brent rising to $112 per barrel and WTI to $106 per barrel, as global energy shortages intensify. Geopolitical risks around Iran and Red Sea shipping are threatening key oil routes, with disruptions via the Strait of Hormuz and Bab el-Mandeb potentially impacting oil flows to Asia and broadening into wider energy and refined product shortages. President Trump threatened further escalation of attacks on Iran, including critical civilian energy infrastructure, oil wells, and Kharg Island, if Iran does not re-open the Strait of Hormuz and a peace deal is not reached shortly. News reports suggest Iran is pushing the Houthis to prepare for renewed attacks on Red Sea shipping, contingent upon further escalation by the US. Saudi Arabia has successfully shifted around 6–7 million barrels per day of its oil flows from the Strait of Hormuz to Yanbu port in the Red Sea, but disruptions in the Bab el-Mandeb Strait could have an even bigger impact on energy flows, especially to Asia. The crisis is described as different this time, with potential energy shortages across Asia, regional spillovers through refined petroleum product shortages, and indirect impacts on fertilizers, food production, remittances, petrochemicals, and supply chain disruptions, including travel and transportation sectors [2].
Both sources highlight the heightened risk of oil price spikes and supply disruptions due to geopolitical tensions and potential blockages of key shipping routes. Societe Generale emphasizes the risk of Brent reaching $150 per barrel in a worst-case scenario, while MUFG points to current price surges and broader impacts on energy and related sectors. The market implications are significant, with both banks warning of structurally tight balances and spillover effects across multiple industries [1][2].
CONCLUSION
The oil market faces heightened volatility and risk, with forecasts indicating potential price spikes and widespread supply disruptions due to geopolitical tensions and critical shipping route blockages. Both Societe Generale and MUFG warn of structurally tight balances and broader impacts on energy and related sectors. Investors and market participants should prepare for continued uncertainty and elevated prices in the near term.