Investing.com — Bank of America has raised its oil price forecast for 2026 as disruptions in the Strait of Hormuz tighten global supply and accelerate inventory drawdowns.
The bank now expects Brent crude to average $77.50 per barrel in 2026, up from a prior estimate of $61, reflecting the growing impact of the conflict on global oil flows. The new outlook incorporates multiple potential paths depending on how long the disruption lasts.
Brent was trading at $103 at the time of writing.
The forecast assumes two equally likely scenarios. In one case, oil flows normalize by April and Brent averages around $70.
In a second scenario, the conflict extends into the second quarter, pushing average prices closer to $85. A more extreme scenario—considered unlikely by the bank—would see Brent averaging around $130 per barrel if disruptions persist into the second half of the year.
“When the war ends, the team sees oil markets reverting to a surplus, driving Brent back to $65 in 2027 – contingent upon no ongoing supply losses,” analysts led by Kalei Akamine wrote.
The disruption has already had a measurable impact on global oil supply. Roughly 20 million barrels per day of crude and refined products normally transit the Strait of Hormuz, a critical chokepoint for global energy trade.
“Traffic through the Strait stopped dead, almost two weeks ago,” BofA said, adding that alternative pipeline routes to the Red Sea have not been able to offset the lost supply.
As a result, nearly 200 million barrels of crude have already been removed from the global market, erasing about half of the roughly 400 million-barrel inventory build recorded last year.
With stockpiles falling and supply constrained, BofA said the disruption is strengthening oil fundamentals and lifting the long-term price outlook. “With no end to the war in sight, oil stockpiles are draining, and firming the fundamental outlook post-war,” the analysts wrote, pointing to a long-term Brent price strip around $70 per barrel.
Reflecting the stronger pricing environment, BofA also raised its mid-cycle oil assumption to $70 Brent from $65, placing it near the midpoint of the bank’s broader $60–$80 long-term commodity price range.
The higher oil price outlook has also lifted valuations across the U.S. exploration and production sector, with BofA increasing price targets for oil-levered E&P companies by about 17% on average.
Within the group, the analysts continue to prefer among large-cap producers, while highlighting mid-cap names and as attractive opportunities for a valuation re-rating.
BofA also reiterated a Buy rating on , citing its capital-efficient 2026 plan and potential modest growth in its 2027 maintenance case.