Bank of America Warns Brent Crude Could Surge Past $150 as Iran Conflict Escalates

Bank of America has warned that Brent crude prices could surge past $150 per barrel if the Iran conflict continues to escalate and global crude inventories keep declining. The bank's strategy team, led by Francisco Blanch, raised their year-end Brent price target from $83 to $95 per barrel, citing the impact of Middle East geopolitical tensions on oil market supply.

The short-term relief in oil prices is due to Saudi Arabia rapidly reorganizing its export routes and US-Iran diplomacy showing signs of progress. The country has completed a large-scale rerouting of exports in less than a week, with approximately 14 million barrels of crude loaded onto seven very large crude carriers (VLCCs) in the Gulf region on Sunday.

However, Bank of America believes that even at current elevated levels, energy prices adjusted for income and inflation remain relatively affordable. The bank forecasts Brent crude to average approximately $80 per barrel in 2027 but acknowledges that with strategic reserves declining and the market showing severe short-term supply shortages, the oil market still faces significant challenges.