Global oil benchmark Brent crude could see a sharp upward revision in price forecasts if ongoing conflict in the Middle East extends further into June, according to a latest market outlook by BMI and Bloomberg consensus data.
BMI maintained its 2026 Brent crude forecast at an average of USD78 per barrel for now, in line with expectations of a relatively swift resolution to the conflict and gradual recovery of oil flows through the Strait of Hormuz. However, the research house warned that an extended disruption scenario could push its forecast for physical crude benchmark Dated Brent to as high as USD90 per barrel in 2026.
The warning comes as oil markets remain highly volatile amid escalating geopolitical tensions and uncertainty over global supply routes.
Front-month Brent crude futures surged to USD109.9 per barrel on May 5, up 21.6% from the April 17 low, after renewed fears over disruptions to shipping and oil production in the Gulf region. Prices briefly exceeded USD114 per barrel before retreating amid reports of possible diplomatic progress between the United States and Iran.
BMI said a prolonged blockade or military escalation around the Strait of Hormuz could significantly tighten global crude supply and lead to severe disruptions in physical oil markets.
The report noted an increasing disconnect between Brent futures prices and physical crude prices such as Dated Brent, with physical barrels trading at a substantial premium due to immediate supply shortages, rising freight costs and higher insurance premiums.
While Brent futures averaged around USD7 per barrel below Dated Brent in May, BMI said the spread remained historically wide, reflecting acute scarcity in prompt physical supply and heightened market uncertainty.
The firm added that delivered crude costs for refiners had reportedly climbed above USD150 per barrel in some cases, despite benchmark futures remaining much lower.
BMI warned that refiners had already cut processing rates aggressively, particularly in Asia and the Middle East, with the International Energy Agency estimating reductions of around six million barrels per day in April alone.
Although high global inventories have helped cushion immediate shortages, BMI cautioned that prolonged disruptions could rapidly deplete reserves and trigger panic buying, sending benchmark oil prices sharply higher.
The report identified smaller emerging markets in Southeast Asia and East Africa as among the most vulnerable to physical supply shortages. Countries including Cambodia, Bangladesh, Pakistan, Ethiopia, Kenya and Sudan were highlighted as facing elevated risks due to heavy dependence on imported Gulf oil and limited reserve capacity.
Despite near-term supply constraints, BMI turned more optimistic on longer-term production growth prospects from 2027 onwards.
The firm expects a combination of higher replenishment demand, a potential full unwinding of OPEC+ production cuts, and increased production from the United Arab Emirates following its exit from OPEC to support stronger global supply growth.
Under a prolonged conflict scenario, BMI projected Dated Brent could average USD72.5 per barrel in 2027, while Brent futures could average around USD72 per barrel.
