Oil: Higher-for-longer price path as conflict extends – Societe Generale

Societe Generale analysts Michael Haigh, Ben Hoff and Jeremy Sellem argue that Brent now faces a higher-for-longer regime as the US–Israel–Iran confrontation delays the reopening of the Strait of Hormuz into April. They expect a massive supply deficit, slow recovery in Gulf output and shipping, and only gradual inventory rebuilding, lifting their 2026 Brent forecast to $80/bbl.

Brent faces structurally tighter market

"The $150/bbl oil paradigm: prices now face a higher-for-longer baseline. The deepening US–Israel–Iran confrontation removes any realistic chance of near‑term de‑escalation, pushing our assumed reopening of the Strait of Hormuz from March into well into April. In early trading today, Brent surged to over $116/bbl, as President Trump said, “he wants to take the oil in Iran”. With just under 15 mb/d of Gulf supply offline, rising refinery shutdowns and growing infrastructure risks, we expect Brent to average ~$125/bbl in April with credible spikes towards $150/bbl."

"Our central scenario now embeds a two‑month Hormuz closure with lasting supply damage. We assume OPEC losses of 15 mb/d in March and losses and adjustments in April result in an eventual deficit of 8mb/d by mid/late month. We assume GCC output down by up to 3 mb/d through year‑end. Iran loses 2 mb/d of export capacity for the rest of 2026. Additional OPEC supply returns gradually from May, alongside G7 SPR flows and resumed Chinese buying. Prices spike in April (~$125/bbl average with upside to $150/bbl) before easing to around $80/bbl by December."

"Rapid inventory draws mean stocks only return to five‑year averages by year‑end, lifting our 2026 year‑end Brent forecast from $65/bbl to $80/bbl. In short, the market is structurally tighter, more fragile, and highly sensitive to further shocks."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)