In an oil market note sent to Rigzone by the HSBC team on Tuesday, analysts at the company, including HSBC Senior Global Oil and Gas Analyst Kim Fustier, revealed that they had raised their 2026 oil price forecast by $10 per barrel and their 2027 oil price forecast by $20 per barrel.
The analysts highlighted in the note they had increased their Brent price forecast to $90 per barrel for 2026, from $80 per barrel previously, and to $85 per barrel for 2027, from $65 per barrel previously. They also revealed that they had raised their “longer-term assumption” to $75 per barrel from 2028 onwards.
“After the U.S.-Iran MoU fell apart in July, flows through the Strait of Hormuz appear to have settled around 30 percent of pre-conflict levels, albeit with considerable day to day volatility,” the analysts said in the report.
“We think the market is adjusting to a disrupted ‘new normal’ in which the strait is neither fully closed nor fully open, but persistently impaired,” they added.
The analysts stated in the report that their new base case “assumes that a fragile U.S.-Iran understanding eventually emerges but remains prone to repeated breakdowns and continued uncertainty around security, control, and insurance”.
In this scenario, shipping conditions improve only gradually as the industry adapts to elevated risk, the analysts warned.
“We expect liquids flows through Hormuz to rise from circa six million barrels per day currently to eight million barrels per day by year-end and 9.5 million barrels per day by mid-2027,” they said.
The analysts warned that this would still be “far below the 19-20 million barrels per day of pre-conflict transit”.
“This leaves the market tighter for longer than we had previously assumed,” they pointed out.
HSBC’s analysts noted in the report that bypass infrastructure is an increasingly important part of the adjustment.
“Existing Saudi and UAE pipelines, together with projects under construction, should progressively reduce reliance on Hormuz and allow total Gulf exports to recover even if strait utilization remains structurally lower,” they said.
“In our base case, total bypass flows rise from just over four million barrels per day currently to 6.8 million barrels per day by mid-2027, taking total Gulf export volumes to circa 16.5 million barrels per day,” they added.
“Even so, we do not expect the market to return to balance until around mid-2027, implying further inventory drawdowns over the coming quarters,” they continued.
Also in the report, the HSBC analysts highlighted that constrained Gulf product exports, depleted inventories, high freight and insurance costs, Russian disruptions, and limited spare refining capacity “continue to support exceptionally strong cracks”.
“We materially raise our refining margin assumptions for 2026-28 and expect product tightness to persist through 2027, even as crude balances gradually improve,” they added.
The HSBC analysts outlined two alternative scenarios in its report; a “stalemate” and a “recovery”.
Under its stalemate scenario, the analysts noted that, “if diplomacy fails and Hormuz flows stay near current levels, inventories could draw toward operational lows and Brent could rise to circa $120 per barrel, easing once demand destruction and faster non-OPEC supply restore balance in 3Q27”.
Under its recovery scenario, the HSBC analysts said, “if a durable ceasefire is reached in 4Q26, total Gulf exports could rise to near pre-conflict levels”.
“The market could return to balance by year-end and shift to a >3 million barrel per day surplus in 2027; Brent could fall to $70s per barrel by 1Q28,” they added.
Sub-$100 Oil ‘Masks Deeper Energy Stress’
In a commodities insight posted on Saxo Bank’s website on Monday, Ole Hansen, Saxo Bank’s Head of Commodity Strategy warned that sub-$100 Brent “masks deeper energy stress, with diesel, jet fuel and European gas trading at substantial premiums”.
“Crude oil continuing to trade below $100 per barrel might suggest that the global energy market has absorbed the latest Middle East shock reasonably well,” Hansen said in the insight.
“That conclusion, however, risks missing where the real pressure is building,” he warned.
“The crude market has so far been cushioned by a combination of strategic reserve releases, weaker Chinese imports, demand destruction, and continued flows of oil out of the Middle East, either through pipelines or, more quietly, through the Strait of Hormuz,” he said.
“Brent therefore remains well below the levels that would normally be associated with a full-blown supply crisis,” he added.
“Further down the barrel, however, the picture is considerably more troubling,” Hansen warned.
“Middle distillates such as diesel and jet fuel have become the main pressure point, with European diesel trading close to $200 per barrel and jet fuel not far behind,” he stated.
Hansen warned that these products matter far beyond financial markets.
“Trucking, shipping, aviation, construction, agriculture, manufacturing, and heating all rely heavily on distillate fuels, meaning shortages quickly translate into higher operating costs across the economy,” he said.
“This is increasingly turning the current energy shock into a refined-product crisis rather than simply a crude-oil crisis,” he added.
Hansen highlighted in this commodities insight that, for now, the crude market remains “relatively well supplied compared with refined products”.
He warned, however, that this relative stability should not be mistaken for comfort.
“Traffic through the Strait of Hormuz has again fallen sharply following renewed U.S.-Iran attacks, while the risk of further restrictions on commercial shipping remains elevated,” he said.
“Some reports indicate that observed commodity-vessel traffic has recently fallen to its lowest level since May,” he added.
“A prolonged disruption therefore poses a two-sided threat. First, it risks pushing Brent decisively above $100 as crude inventories and emergency buffers are gradually depleted,” he continued.
“Second, and potentially more damaging for the real economy, it would place even greater strain on refining systems already struggling to supply enough diesel, jet fuel and fuel oil,” he warned.
The key risk is therefore no longer simply another spike in crude, Hansen went on to state.
“It is that crude rises while refined products and gas remain structurally tight,” he said.
“That combination would intensify the pressure on transport, industry, utilities, and households, raising the likelihood that the current energy shock translates into persistently higher consumer prices and a more difficult inflation outlook for central banks,” he went on to state.