Iran War Shock Drives Steepest Hike yet in Oil Price Forecasts: Reuters Poll

Iran Conflict Triggers Record Surge in Global Oil Price Forecasts

By Anmol Choubey

Impact of Iran Conflict on Oil Markets and Price Forecasts

March 31 (Reuters) - Stalled oil flows through the Strait of Hormuz and output disruptions because of the Iran war have led analysts to increase their annual price forecasts by the most in Reuters poll records.

Record Forecast Increases and Analyst Predictions

The survey conducted in March predicts Brent crude will average $82.85 per barrel in 2026, about 30% higher than February's forecast of $63.85, polled before the war began. The findings were based on responses from 38 economists and analysts.

The $19 surge represents the steepest annual forecast increase yet on the basis of Reuters monthly oil poll data, which goes as far back as 2005.

U.S. crude is projected to average $76.78 per barrel, up from February's estimate of $60.38. Both benchmarks have gained about 60% since the conflict began on February 28, with Brent set for a record monthly jump. [O/R]

Strait of Hormuz Disruption and Global Impact

The month-long conflict has led to the effective closure of the Strait of Hormuz, through which roughly 20% of global oil and LNG transits, prompting Gulf producers to cut output in response.

"Another few weeks of disruption carries the risk that oil futures based west of Suez will replicate the high prices already seen east of Suez," said Ole Hansen, head of commodity strategy, Saxo Bank.

"Unless the Strait opens soon, the risk of prices rallying to demand destruction territory cannot be ruled out."

A Tighter Oil Market

Potential for Record Highs and Supply Recovery

Some analysts say oil could test its 2008 record of $147 a barrel in a risk scenario whereby the Strait remains closed for an extended period. They largely expect supply flows to gradually recover in April and May, although prices are set to remain elevated even after.

"If the Strait of Hormuz remains closed for another month with no signs of a pending resolution, the price of Brent crude will move toward $190," said John Paisie, president of Stratas Advisors.

Long-Term Supply Outlook

While some recovery is expected in the third quarter, supply is projected to remain below pre-crisis levels throughout 2026 as shut-ins and infrastructure issues slow the recovery process.

Supply from the Organization of the Petroleum Exporting Countries and their allies, known as OPEC+, is expected to fall sharply by up to 11 million barrels per day in the second quarter, the poll showed.

"Even after a normalisation of Hormuz traffic, depleted global inventories would leave the oil market tighter, and a risk premium would persist," said Kim Fustier, head of European oil & gas research at HSBC.

Market Deficit Expected in Second Quarter

Strategic Reserves and Production Constraints

The International Energy Agency, which had described the situation as the largest oil supply disruption in history, earlier this month announced a record release of around 400 million barrels from strategic stockpiles to stabilise markets.

Frank Schallenberger, head of commodity research at LBBW, said the release equated to only as much oil as is transported through the Strait of Hormuz in 20 days.

U.S. Production and Global Market Outlook

In the U.S., crude production is forecast to edge higher by 100,000–500,000 bpd through 2026, though depleted drilled-but-uncompleted inventories and structural shale constraints limit rapid growth. Substantial increases are anticipated only in late 2026 or beyond.

Global oil markets are predicted to run deficits in the second quarter before moving into a small surplus by year-end.

Demand Growth and Economic Headwinds

Demand growth forecasts for 2026 range between 120,000 and 800,000 bpd, as high prices and economic headwinds temper consumption in Asia and globally.

(Reporting by Anmol Choubey in Bengaluru; additional reporting by Swati Verma; editing by Barbara Lewis)