BCA Research argues that oil’s recent price drop has erased much of the war premium, leaving prices vulnerable to upward pressure. The firm expects Brent crude to trade between $90 and $110 per barrel, citing reduced investor fear of supply disruptions.
The sell-off reflects a shrinking risk premium rather than weaker fundamentals, according to BCA. Investor positioning, physical oil premiums, and futures pricing all suggest lower concerns about renewed outages. However, the firm warns against assuming a quick resolution to the conflict.
BCA notes that even a peace deal would only modestly lower prices, while escalation could push them to new highs. Depleted inventories would provide less cushion in case of disruptions, as governments prioritize conserving stockpiles over aggressive releases.
Even with a lasting ceasefire, BCA sees support for oil prices. Gulf producers may maximize output, but recovering demand, especially from China, and efforts to rebuild inventories should absorb extra supply, creating a price floor for Brent.