Brent Futures May Trade Above $90 as US-Iran Standoff Continues
The US-Iran standoff is causing significant disruptions to global oil markets, leading to higher prices. According to Mirae Asset Sharekhan, in the absence of a resolution between the two nations, each passing week will see floor prices increasing for global oil prices.
Crude oil prices have been trading in an unusually wide range of nearly $40/bbl, driven by rapid shifts in diplomatic expectations and renewed escalation risk. Although hopes of progress triggered sharp declines in June and early July, the return of hostilities pushed prices as high as $105/bbl on 23 July.
The International Energy Agency's latest monthly report shows that global observed oil inventories fell by 69 million barrels in July. This draw was driven by renewed disruptions to crude flows through the Strait of Hormuz and the Caspian Sea, alongside a decline in floating inventories.
Global refining capacity is expected to fall by 370 kb/d by the end of Q3, while throughput may decline by an average of 2.5 mb/d in 2026 before rebounding by 3.5 mb/d in 2027. Tighter light and middle distillate markets have pushed cracks and margins to record highs.
We believe that in the absence of any resolution between the US and Iran, each passing week would see floor prices increasing for global oil prices, with dated Brent potentially hitting $100 by mid-September and Brent futures above $90.