Oil: Supply shock supports $90–100 well into 2027 – TD Securities

TD Securities’ commodity team argues that prolonged disruption in the Persian Gulf and blocked flows through the Strait of Hormuz leave Oil poised for another sharp leg higher. They see scope for prices to surge by $50 or more if the war persists, with $90–100 crude likely to prevail well into 2027 even if hostilities end soon.

Strait of Hormuz disruption keeps market tight

"Meanwhile, crude oil, petroleum products and LNG are likely to benefit from ever-tighter supply-demand conditions, as flows through the Strait of Hormuz remain frozen. A speedy end to the conflict will flip these trends."

"The longer than expected conflict and the growing risk of even tighter supply conditions as flows through the Strait of Hurmuz remain blocked, production wanes, and inventories get drained, suggests that the surge in energy prices may not have run its course quite yet."

"We can see prices surge another $50 or more if the conflict is not concluded in the coming weeks. Even if the war ended soon, energy prices will stay elevated well into 2027 due to deficits and low inventories, which countries like China and Japan will want to fill as quickly as possible."

"As such, $90-100 crude is likely to be reality for the foreseeable future."

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