OCBC has raised its end-2026 Brent crude oil forecast to US$85 per barrel from US$80, citing persistent geopolitical risks and uncertainty over the endgame of the US-Iran conflict despite signs that Middle East export flows are gradually recovering.
The bank said oil prices are still expected to ease as Saudi Arabia’s East-West pipeline has resumed operations and tankers continue to transit the Strait of Hormuz.
However, the decline is likely to be slower than previously expected because the risk of renewed escalation remains elevated, particularly if further attacks damage energy infrastructure or disrupt regional supply routes.
OCBC said Washington continues to tighten sanctions on Iran, while Tehran has threatened further retaliation and is demanding stricter conditions for any reopening of the Strait of Hormuz.
Shipping activity through Hormuz remains subdued, although the bank cautioned that actual export volumes may be higher than official data suggest as more vessels operate with restricted or disabled tracking systems.
OCBC said rising “dark fleet” activity should not be interpreted as an improvement in security, but rather as evidence that the industry is adapting to operating under prolonged geopolitical risk.
Inventory drawdowns have so far helped cushion the impact of supply disruptions and limited further increases in crude prices. However, declining stockpiles mean that buffer is becoming thinner, leaving the market more exposed to fresh supply shocks.
Refined product markets remain especially tight.
OCBC said spare global refining capacity is limited after attacks on Middle Eastern facilities, shipping restrictions through Hormuz and Ukrainian strikes on Russian refining infrastructure.
China holds the only meaningful spare refining capacity, but authorities have restrained fuel exports to protect domestic supply.
As a result, diesel prices are likely to remain elevated into the peak-demand season, reinforcing energy-driven inflation pressures.
OCBC also warned that the US could face increasing pressure to prioritise domestic fuel availability. While a potential US export ban could temporarily ease domestic diesel prices, it would risk further tightening global fuel markets.
