Brent 2026 view tops $90 for first time since May as MidEast stability remains elusive

By Anjana Anil

Oct 30 (Reuters) - Analysts have raised their 2026 oil price view, pushing the Brent forecast above $90 a barrel for the first time since May as disruptions to Middle East energy flows persist, tempering expectations of regional stability and underpinning prices.

A survey of 32 economists and analysts conducted through October forecast that Brent crude would average $92.88 a barrel in 2026 and US West Texas Intermediate $86.60 a barrel. This compares with the previous month's estimates of $89.05 and $83.90 for Brent and WTI respectively.

"Constrained Middle Eastern flows, exceptionally tight product markets, and depleted inventories suggest that a full return to pre-war production, trade routes, and shipping conditions will take longer, leaving risks skewed to the upside," said UniCredit analyst Tobias Keller.

PEACE HOPES FLICKER

The US-Israeli war on Iran that broke out in late February pushed Brent prices to as high as $126.41 a barrel in April.

The war has rippled across the Middle East, putting the Strait of Hormuz — a narrow waterway that carried around a fifth of the world's energy supplies prior to the conflict — at the center of the turmoil.

According to data compiled by a Washington-based think tank that has tracked maritime security incidents worldwide since 2017, October has been the worst month for attacks on commercial shipping in the Strait and nearby waterways.

The prospect of peace remained fragile, with Yemen's Iran-aligned Houthis renewing attacks on key oil producer Saudi Arabia, including on the Ras Tanura oil refinery, the kingdom's largest.

In the physical crude market, crude grades such as North Sea Forties (BFO-FOT) are trading at close to a record premium to the price of physical benchmark dated Brent.

In futures markets, Brent and WTI prices remain higher for contracts for prompt delivery than for crude for delivery later , , a price structure known as backwardation that suggests a tight market for oil in the nearer term.

"The Hormuz liquids flows recovered faster than our original base-case assumption to around 10 million barrels per day, helping cap prices, but the physical market remained abnormally tight because of steep backwardation, elevated crude differentials and record shipping costs," said Kim Fustier, HSBC's head of European oil & gas research.

HIGH PRICES CURB DEMAND

High oil prices are increasingly weighing on consumption, poll participants noted. HSBC estimated the disruption resulted in around 5 million barrels per day of demand loss in the second quarter, concentrated in lower-income countries.

Analysts see demand declining in 2026 before rebounding next year. On average, the poll showed 2026 demand falling by 2.5 million bpd, while 2027 demand growth is estimated at around 2.2 million bpd.

However, the survey noted that demand destruction would not be sufficient to eliminate supply-driven tightness in the market.

It forecast an oil market deficit of around 2.7 million bpd in the fourth quarter of 2026. Most participants expect a surplus in 2027 if Gulf flows improve, with an average consensus of about 290,000 bpd.

Meanwhile, participants broadly expect OPEC+ to avoid major policy shifts in the near term.

Members of seven core OPEC+ countries are set to meet online on Sunday, and are likely to keep their December oil output targets steady, three people with knowledge of the matter told Reuters.

"Until a peaceful resolution to the Middle East conflict is found, which we do not foresee in 2027, we do not expect (OPEC+) to approve any significant new decisions," said Davide Tabarelli, president of Nomisma Energia.