Bank of America raises oil forecast, warns of $150 risk

Bank of America ↘ 3.09% raised its second-half 2026 Brent crude forecast from $83 to $95 a barrel on Tuesday, warning that oil prices could surge past $150 if supply disruptions from the war in Iran persist into next year.marketwatch+1

Strait of Hormuz Disruptions Drive the Revision

The revised outlook, published in a note dated Monday by a team led by Francisco Blanch, BofA's head of global commodities and derivatives research, centers on the fallout from Iran's near-closure of the Strait of Hormuz following the U.S.-Israel joint assault on the country in late February. Roughly one-fifth of the world's oil and liquefied natural gas flowed through the strait before the war began.investing

BofA analysts estimated that disruptions to Hormuz shipments may have reached as high as 14 million barrels per day, compared with pre-war averages of 4 to 8 million barrels per day. "Although alternative routes and escorted Hormuz shipments have mitigated some of the shortfall, damaged infrastructure and rising geopolitical tensions make rapid normalization unlikely," the team wrote, according to MarketWatch News Corp ↘ 1.28%.qz+2

Cascading Risks Across the Gulf

The conflict's effects have rippled well beyond Hormuz. Iran-backed Houthi militants and Saudi-aligned forces in Yemen have clashed over territory near the Bab el-Mandeb Strait, another chokepoint for Gulf oil flows. Saudi Arabia, which has relied on the Bab el-Mandeb to connect its crude exports to global markets since Hormuz was effectively shut, has also faced attacks on a key east-west pipeline that carries energy products across the kingdom.investing

Still, some resilience has emerged. Saudi Arabia has reportedly increased crude shipments through Hormuz, with the six-day average rising sharply from August levels, according to satellite data cited by Reuters. Brent crude futures fell on Tuesday, slipping below $100 a barrel after having topped that mark for several days amid fears the conflict was broadening.investing

Diplomatic Hopes and the $150 Threshold

Blanch discussed the outlook on CNBC's "Squawk on the Street" on Tuesday, noting that BofA's central forecast puts Brent around $100 a barrel. A media report indicated that Iran has offered to reopen Hormuz within seven days in exchange for a de-escalation of U.S. military pressure, and hopes have grown that diplomatic progress could come at the United Nations General Assembly gathering this week.cnbc+1

Should those diplomatic efforts falter and disruptions continue into 2027, BofA warned that front-month Brent contracts could spike further, with $150 oil potentially needed to meaningfully curb demand.qz+1