Bernstein warns Brent crude could hit $150 amid 65% drop in Middle East oil flows

Bernstein analysts warned on Monday that Brent crude prices could surge to $120–$150 per barrel as combined oil flows through three critical Middle East chokepoints have collapsed to just 35% of pre-conflict levels, leaving the global market in what they described as "chronic undersupply."

In a September 14 report, analysts Neil Beveridge and Brian Ho said that their previous forecast of $90 per barrel for 2026 "has been overtaken by reality," with risks skewed toward further price increases. Total oil transported through the Strait of Hormuz, the Bab el-Mandeb Strait, and the Suez Canal has fallen below 7 million barrels per day, down from approximately 20 million barrels per day before the conflict.gurufocus+2

The analysts said the likelihood of a de-escalation in the short term is "very limited".moomoo

IEA Slashes Supply Forecasts

The warning came as the International Energy Agency published updated forecasts showing the depth of the supply shock. The IEA reported that global oil supply fell by 1.6 million barrels per day in August to 100.1 million bpd, with around 10 million bpd of Gulf output still shut in.trend+1

The agency now expects global oil supply to decline by 5.7 million bpd year-on-year to 100.7 million bpd in 2026, a figure 1.3 million bpd lower than its previous projection. Flows through the Strait of Hormuz dropped to 7.6 million bpd in August, and the IEA assumes shipping through the waterway will remain restricted throughout 2026, with a return to normal not expected until 2027.businessamlive+1

Saudi Arabia bore the brunt of August's disruptions, cutting total oil production by 2.6 million bpd as attacks on tankers and energy infrastructure forced crude shipments to fall to 6 million bpd — the lowest level in more than three decades.trend

Pipeline Attack Compounds the Crisis

The supply picture worsened further on September 11, when drone attacks shut Saudi Arabia's East-West pipeline, which had been rerouting around 4 million bpd to Yanbu on the Red Sea to bypass the Strait of Hormuz. Industry sources told Egypt Oil & Gas that Yanbu currently holds enough stocks to maintain exports for only five to seven days, and the extent of the damage remains undisclosed.egyptoil-gas

The pipeline closure coincided with Houthi fighters seizing an island at the mouth of the Red Sea, adding another layer of disruption to an already strained network.egyptoil-gas

Dwindling Buffers

Bernstein also flagged that the U.S. Strategic Petroleum Reserve is projected to reach 252 million barrels by the end of September, approaching operational limits. Globally, observed stocks are now about 507 million barrels below pre-war levels, according to the IEA, while cumulative demand reductions since the conflict began have exceeded one billion barrels.businessamlive+1

"Central banks cannot do anything about adverse supply shocks," Holger Schmieding, chief economist at Berenberg, cautioned in a separate analysis. "They should not react with rates to the direct effects of such disruptions, which raise prices but hurt growth at the same time".businessamlive