HSBC Revises Brent Price Forecast Amid Persistent Supply Constraints
HSBC’s latest analysis upgrades its Brent crude oil price forecast to $90 per barrel for 2026, up from an earlier $80 estimate. The bank also raises its 2027 forecast to $85 from $65, while long-term prices from 2028 onward are adjusted to $75 per barrel. These changes reflect ongoing supply tightness in the oil market driven largely by disruptions in shipping volumes through the Strait of Hormuz.
Strait of Hormuz Shipping Stagnates at Low Levels
Since the breakdown of a US-Iran memorandum of understanding in July, oil shipments through the Strait of Hormuz have remained at roughly 30% of pre-conflict levels. HSBC characterizes this as a "continued constrained state," rather than a complete closure or full recovery. The fragile geopolitical dynamics suggest a slow uptick in passage volumes, though still well below the daily 19 to 20 million barrels prior to tensions. Under its baseline scenario, the bank projects Strait oil transport to rise from about 6 million barrels per day (mb/d) currently to 8 mb/d by year-end, reaching 9.5 mb/d by mid-2027.
Regional Pipeline Diversions Mitigate Strait Reliance
With the Strait’s capacity curtailed, alternative pipeline routes from Saudi Arabia and the UAE have increasingly supplemented exports. These bypass pipelines currently carry just over 4 mb/d and are expected to increase to 6.8 mb/d by mid-2027. This infrastructure helps push Gulf total exports close to 16.5 mb/d, easing some of the supply pressure caused by Strait restrictions. However, it does not fully replace the volume previously moved through the Strait.
Market Balancing Delayed, Refining Margins Remain Elevated
HSBC anticipates global oil supply and demand will only reach equilibrium by mid-2027, with inventories steadily declining until then. Refining markets are similarly tight due to export controls, low inventories, rising freight and insurance costs, disruptions linked to Russia, and constrained refining capacity. These factors have led HSBC to increase its refining margin forecasts for 2026 through 2028.
Alternative Price Scenarios Reflect Geopolitical Risks
HSBC presents two divergent paths: if diplomatic efforts fail and Strait throughput remains suppressed, inventories could fall to critical lows, pushing Brent prices towards $120 per barrel. Following this peak, prices might decline starting in Q3 2027 as demand softens and non-OPEC supply expands. Conversely, a durable ceasefire within the year restoring Gulf exports to pre-crisis levels could rebalance the market by year-end. This scenario might generate a supply surplus of 3 mb/d in 2027, potentially driving Brent prices down to around $70 in early 2028.
These contrasting forecasts underscore the heavy dependency of oil prices on the evolving US-Iran situation. Market participants continue to closely monitor prospects for the Strait of Hormuz’s traffic recovery as a critical determinant of near-term oil supply security.