Oil Prices Elevated Amid Hormuz Risks and Escalating Middle East Tensions
Oil prices are expected to remain elevated in the near term due to concerns over supply disruptions through the Strait of Hormuz, a critical waterway for global oil trade.
The recent Israeli and U.S. strikes on Iranian targets have led to increased tensions across the Gulf, with Iran's Islamic Revolutionary Guards Corp warning that any vessel attempting to transit could come under attack.
Major banks such as Goldman Sachs and UBS have revised their oil price forecasts upwards in response to these escalating risks, with Goldman Sachs now predicting Brent crude will average $76 per barrel in Q2 2026 and UBS forecasting an average of $71 per barrel in the first quarter.
J.P. Morgan estimates that if the Strait of Hormuz remains closed, Iraq and Kuwait could shut down crude oil supply within days, leading to losses of up to 4.7 million barrels per day.