Oil prices to hold around $88-95/barrel for next 4-6 weeks, says analyst

Mohammed Imran of Mirae Asset Sharekhan expects that Brent and WTI floor prices would remain elevated at pre-war levels

Crude oil retreats, but floor prices expected to remain elevated at pre-war levels

 

The announcement of a two-week ceasefire between the United States, Iran, and Israel marks the first significant de-escalation since military actions began on February 28, 2026. While the Strait of Hormuz remains effectively closed to large-scale commercial traffic, the cessation of active strikes on energy infrastructure has immediately deflated the "conflict premium." Brent crude, which peaked near $128/bbl on April 2, has retraced to the $93–$95 range as of this morning. However, the structural damage to regional supply chains suggests that "fair value" remains significantly higher than pre-war levels.

 

 

What began as a limited military operation rapidly escalated into a broader regional conflict, with Iran launching retaliatory missile and drone strikes targeting GCC energy infrastructure, commercial shipping in the Strait of Hormuz, and US military installations across the Gulf. The episode has emerged as the most consequential disruption to Middle East energy markets since the 1973 oil embargo. The economic fallout is likely to unfold over the coming months: crude oil prices have surged nearly 60 per cent since the onset of hostilities and remain about 35 per cent above pre-war levels. At these prices, global growth could face a 20–30 basis point drag, while inflationary pressures may intensify, adding an estimated 70–90 basis points to global inflation in 2026.

GCC Oil supply decline in March 2026 & global reserve depletion

The Strait of Hormuz closure translated into an unprecedented contraction in GCC oil production, as producers were physically unable to export accumulated stocks and were forced to curtail output.

 

The EIA April 2026 STEO — released just yesterday on 7 April — reflects a dramatic revision to both supply and demand assumptions, given the conflict's persistence beyond initial assumptions. 

Metric	Pre-War Forecast (Feb 2026)	IEA Mar 2026	EIA Apr 2026	YoY / Revision Change	Notes
Global Oil Demand Growth 2026 (mb/d)	0.93	0.64	0.6	−0.33 vs pre-war	Demand outlook weakened
Global Oil Supply Growth 2026 (mb/d)	2.4	1.1	~1.0 (est.)	−1.4 revision	Major downward supply revision
Middle East Shut-in Production (mb/d)	—	~8–10	7.5 (Mar) / 9.1 (Apr)	Largest in history	Severe disruption
Global Demand 2027 Rebound (mb/d)	—	—	106.2 (+1.6 mb/d)	Recovery expected	Demand bounce-back assumed
LPG/Ethane Exports to China (Mar–Apr)	Normal	−250 kb/d	Effectively shut in	Significant decline	Petrochemical sector impact

Source: IEA/EIA monthly reports

OPEC+ decides to ramp up production

OPEC+ has announced plans to increase crude oil production by 206,000 barrels per day in May, signalling cautious optimism that geopolitical tensions in the Middle East may be easing. However, the path to normalisation remains uneven. Gulf producers face significant operational challenges as they work to restore output capacity damaged during the conflict, including disruptions to refineries, storage terminals, and export infrastructure. Despite the planned increase, regional production remains structurally constrained, with several producers still operating well below pre-war levels.

 

The May increase forms part of OPEC+’s broader effort to reverse the 2.2 million bpd of voluntary production cuts implemented in early 2024. Even after this step, approximately 827,000 bpd of cuts remain to be unwound. Reflecting the scale of recent disruptions, OPEC’s crude oil production fell sharply in March by an estimated 7.56 million bpd, taking group output to roughly 22.05 million bpd—its lowest level in more than three decades.

 

On the policy front, the political imperative to contain energy prices has intensified in the United States. With elections approaching and public approval under pressure, a renewed push to reduce oil prices could emerge, potentially through a relaxation of sanctions on Russian and Iranian crude. Such a move would unlock substantial volumes currently held in floating storage—estimated at around 290 million barrels, roughly 40% higher than a year ago—adding further downside risk to prices if released into the market.

Scarcity of petrochemical products

The Russia–Ukraine war (2022–ongoing) has already removed approximately 700,000–900,000 b/d of Russian refining capacity from the Western supply chain via sanctions and infrastructure damage. This pre-existing tightness in European diesel and jet fuel markets means the additional GCC refinery disruption arrives in an already structurally constrained global refining system. Combined global refining capacity loss (Russia + GCC + Iran) is estimated at 3.5–4.0 mb/d, creating conditions for elevated refined product crack spreads well into 2027. 

ountry	Refinery/Facility Capacity Lost (b/d)	LNG Impact (Mt/yr)	Petrochemical Impact	Recovery Timeline
Saudi Arabia	550,000–700,000	—	LPG exports disrupted	3–6 months
Qatar	200,000	77 Mt fully offline	Urea/polymer halted	6–12 months
UAE	600,000–800,000	Low-level ops only	Shah/Habshan disrupted	6–18 months
Kuwait	~500,000	—	Significant	3–9 months
Bahrain	400,000	—	Moderate	3–6 months
Iran (refining)	500,000+	South Pars partial	Significant	12–24 months
Total (GCC + Iran)	~2.75–3.15 mb/d	~77+ Mt equivalent	Severe across value chain	Staggered (2026–2027)

Brent crude price trajectory — scenarios ($/b)

The US (world's largest producer), Brazil, Guyana, Canada, and Kazakhstan have been ramping up production to partially compensate for the Middle East void. The EIA forecasts that non-OPEC+ producers will account for the entire global supply growth in 2026. We expect that Brent and WTI floor prices would remain elevated at pre-war levels for the reasons explained above, and we believe the broader range would be $88–95 for the benchmarks for 4–6 weeks. Once gradual recovery is seen from the GCC producers, we could see prices holding between $80–85 in the next six months.  ========================= 

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