Oil may top $150 if disruptions run into spring 2027 - BofA

There is little doubt that oil prices are a key market driver these days, shaping both investor sentiment and expectations for the outlook for interest rates around the globe.

Oil prices held near two-week lows today, capped by improving Gulf crude supplies and hopes that diplomacy could ease tensions, but analysts remain cautious about the outlook.

“Although alternative routes and escorted Hormuz shipments have mitigated some of the shortfall, damaged infrastructure and rising geopolitical tensions make rapid normalization unlikely,” commodity strategists at BofA say. They forecast Brent at $95 in the second half of 2026.

However, “the most important change is an expanding tail risk: strategic and commercial inventories are becoming progressively thinner while physical crude markets are already signalling acute near-term scarcity through extreme backwardation,” they add.

“Thus, if disruptions persist into spring 2027 or oil infrastructure damage intensifies, ICE Brent front month contracts may have to spike well above $150 a barrel to curb global oil demand.”