Crude oil outlook: Brent seen in $90 - $115 range as supply strains persist

Gulf's flagship national oil companies have issued stark timelines. Saudi Aramco CEO Amin Nasser warned that oil market will not normalise until 2027 if Hormuz disruptions persist past mid-June 2026.

As Brent slides below $100 on deal optimism, structural fragilities, drawn-down reserves, a crippled OPEC buffer, and a hurricane season bearing down on depleted inventories suggest the market is pricing a resolution it has not yet earned.

 

The global benchmark crude corrected nearly 16 per cent in May on building optimism of a negotiation between the US and Iran reaching a final print. As a result, Brent briefly fell to $90 per barrel. Since then, a fragile equilibrium has held prices oscillating just below the $100 threshold. Brent hovered around $100 a barrel through mid-May, well off its April 7 post-war peak of $126, yet still far above pre-war levels.

 

 

To the untrained eye, this looks like stabilisation. It is not. The correction has been driven by two forces: diplomatic optimism and, more significantly, brutal demand destruction, neither of which resolves the supply crisis structurally.

 

Demand destruction: Asia blinks first

 

The sharpest transmission mechanism has been the collapse in Asian import demand. Chinese seaborne crude imports fell by a massive 3.6 mb/d from February to April, according to Kpler. Beijing appears to have drawn strategically on its Strategic Petroleum Reserve to avoid paying war premiums, suppressing headline import data while masking underlying stress.

 

Aviation has become the most visible casualty. Jet fuel, which cost $85–90 per barrel before the conflict, surged to approximately $195 per barrel globally within weeks of the Strait's closure. The consequences have been swift and systemic. Norse Atlantic halted all Los Angeles flights; Virgin Atlantic scrapped its London–Riyadh service; KLM cut 80 return flights at Amsterdam Schiphol; Qantas is reducing US routes while estimating an additional A$800 million on its fuel bill; and Cathay Pacific has pulled 2% of Asia-Pacific frequencies.  Global oil demand expectations have shifted from projected growth of 730 kbd to a contraction of 420 kbd for 2026 — a downgrade of 1.3 mb/d versus pre-war forecasts.

 

Macro-headwind

 

The macroeconomic backdrop reinforces this demand compression. China's NBS Manufacturing PMI slipped to 50.0 in May from 50.3, with new orders contracting after two months of expansion and purchasing activity falling for the first time in three months. The Eurozone Composite PMI fell to 47.5 in May - a 29-month low - with S&P Global noting the steepest composite output contraction in two and a half years, consistent with a modest decline in Q2 real GDP growth. The sole outlier is the United States: the ISM Manufacturing PMI hit 54 pt in May, its highest since May 2022.

 

Stalled diplomacy: The uranium impasse

 

Iran has not agreed to hand over its highly enriched uranium stockpile, and senior Iranian sources confirmed that the nuclear issue was not part of the preliminary MoU framework. Washington has demanded Iran suspend uranium enrichment for at least a decade and physically remove its enriched uranium from the country — terms Tehran has flatly rejected, citing nuclear energy as a fundamental sovereign right.

 

Transit data from Kpler and Windward shows only two to five tankers per day moving through the Strait, against pre-war volumes of approximately 130-140 per day, with around 240 tankers currently idling outside the waterway.

 

Strategic reserves: A buffer running dry

 

Observed global inventories — including oil on water — were drawn down by 250 mb over March and April, equivalent to 4 mb/d. The IEA coordinated the release of 400 million barrels across 32 member countries to partially offset losses. We expect global inventories to continue falling by an average of 4.5 mb/d through Q2 2026, keeping Brent supported at approximately trade above $100 per barrel in June.

 

Additionally, the OPEC spare capacity backstop has been severely impaired in parallel. Following the UAE's formal departure from OPEC on May 1, 2026, the EIA revised its estimate of OPEC's spare production capacity to just 2.5 mb/d in 2027, down sharply from a pre-war estimate of 3.8 mb/d. The market's traditional shock absorber has never been thinner.

 

The clock is ticking

 

Both Gulf’s flagship national oil companies have issued stark timelines. Saudi Aramco CEO Amin Nasser warned on May 11 that the oil market will not normalise until 2027 if Hormuz disruptions persist past mid-June 2026, noting the market has already lost over 1 billion barrels cumulatively. On the same day, ADNOC CEO Sultan Al Jaber assessed that even under immediate conflict resolution, it would take at least four months to restore 80% of pre-conflict flows, with full normalisation not expected before Q1–Q2 2027.

 

The unpriced risk: Atlantic hurricane season

 

One tail risk markets are entirely ignoring is the approaching Atlantic hurricane season. Historically, a Category 3 storm striking Gulf of Mexico infrastructure has produced oil price spikes of $5–10 per barrel, typically absorbed within weeks by drawing on commercial and strategic reserves. However, as the US has been using crude oil SPR for the last two months, that commercial buffer no longer exists.

 

Any weather-driven supply disruption in the US Gulf would now produce a materially larger and longer-lasting price spike than historical analogies suggest.

 

Supply-demand balance and the road ahead

 

The current supply-demand arithmetic is stark. Global oil supply declined to 95.1 mb/d in April, while demand roughly sits around 99mbpd, though contracting, remains structurally above available supply. The gap is being bridged by SPR releases that are approaching their functional floor.

 

Outlook:

 

The near-term outlook for Brent crude oil through Q3 2026 is best characterised as range-bound between- $90 and $115 per barrel, with upside risk from negotiation breakdown or hurricane disruption and downside risk from accelerating demand destruction and a ceasefire breakthrough.  What should unsettle markets today is not the oil at $100, but the realisation that the market's safety valves — spare capacity, strategic inventories, and routing optionality — have been simultaneously and severely degraded. The next shock, whether geopolitical or meteorological, will arrive at a system with far less capacity to absorb it.

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(Disclaimer: This article is by Mohammed Imran, research analyst, Mirae Asset Sharekhan. Views expressed are his own.)