Elevated oil prices are the new normal; $120/bbl possible, say analysts

Crude oil prices that recently topped $100 a barrel (bbl) are settling into a prolonged new normal where disruption risk is persistent, not episodic, said S&P Global Energy analysts in a report. 

 

Other analysts, too, echo similar thoughts and expect crude oil prices to stay significantly higher amid the recent turn of events that could shrink global inventories, slow global supplies. 

 

Brent crude oil prices, according to analysts at Mirae Asset Sharekhan, could test $120/bbl going ahead with the average price for 2026 around $92/bbl.

 

“As Trump's campaign for the mid-term election intensifies, we could see news flow that could lead to a sharper correction, but that should be considered a long opportunity, as underlying supply would remain tight for at least six months," said Mohammed Imran, research analyst, Mirae Asset Sharekhan in a recent note.

 

 

Oil prices have moved up around 23 per cent from $88/bbl on August 28 to cross $108/bbl levels, the highest level seen since May 2026. The up move was triggered by escalating attacks and disruptions along key West Asian shipping routes which fueled concerns over global oil supplies.

 

Oil production

 

For the first time since the US-Iran war started in February 2026, S&P Global Energy does not project West Asian crude oil production to return to prewar levels by the end of 2027. The outlook does not assume a definitive end to the US-Iran conflict, a normalization of Hormuz or a disappearance of Red Sea disruption risk from Iran’s Houthi allies during that timeframe. 

 

As a result, Middle Eastern crude oil and condensate exports are now expected to average roughly 10 million-16 million b/d on a monthly basis through 2027, compared with about 20 million b/d before the war in January-February 2026.

 

S&P Global Energy now expects crude oil prices broadly in an $80-$100/barrel range through 2027, with Dated Brent averaging around $90 or higher for the balance of 2026 and $86 in 2027, which is $5 higher than its earlier outlook. 

 

"Prices would likely be higher if not for the current lack of available refining capacity, which continues to put downward pressure on crude prices. The Russia-Ukraine war and the US-Iran conflict have reduced refinery output because of damaged facilities or through difficulty moving products to market," S&P Global Energy said.

 

China, meanwhile, has also lowered its seaborne crude oil purchases and refinery runs. Collectively, these factors have reduced crude demand and helped moderate crude prices, the report said. S&P Global Energy now expects fourth quarter 2026 global crude oil demand to be 80.2 million b/d, 4.7 million b/d less than a year ago.

 

“Crude markets remain caught between constrained supply and limited available refining capacity. Lower Middle Eastern production supports prices, while refining constraints and relatively low levels of Chinese crude oil imports limit crude demand," said Jim Burkhard, Vice President and Global Head of Crude Oil Research, S&P Global Energy.

 

For the third and the fourth quarter of calendar year 2026 (CY26), analysts at Rabobank International have maintained their crude oil price forecast at $90/bbl and lowered it to $86/bbl by the second quarter of CY27.