Brent: Higher inflation risks support prices – OCBC

OCBC’s Sim Moh Siong and Christopher Wong note that renewed US-Iran tensions have lifted Oil prices and revived global inflation concerns, with markets now fully pricing a Federal Reserve rate hike by October. They have raised their end-2026 Brent forecast to USD80/bbl from USD75/bbl, citing expectations of a slower Middle East supply recovery as negotiations on reopening the Strait of Hormuz remain stalled.

Inflation risks and supply constraints

"US strikes on Iran in response to attempted attacks on commercial shipping lifted energy prices overnight."

"The attacks follow a brief period of relative calm that had allowed Persian Gulf producers to move crude through the Strait of Hormuz via a clandestine shuttle system."

"We have also raised our end-2026 Brent forecast to USD80/bbl from USD75/bbl, reflecting expectations of a slower recovery in Middle East supply as negotiations between the US and Iran on reopening the Strait of Hormuz remain stalled."

"Renewed US-Iran tensions have revived inflation concerns, lifting oil prices, bond yields and the USD. Markets now fully price a Fed hike by October, while delayed Middle East supply recovery supports a higher Brent oil outlook."