Daily Spotlight: Oil Prices: Higher for Longer

Summary

The price of a barrel of West Texas Intermediate, the crude oil benchmark grade, had declined steadily for the past four years as new energy sources emerged. But it soared to triple-digit territory in recent months (and has stayed there) due to the impact on supply sources from the war in Iran. Iran is not necessarily a major producer of oil (3% of the global total), but the country has responded to the U.S. attack by effectively closing off the adjacent Strait of Hormuz, through which tankers moving about 20% of the world's oil supply travel. According to the U.S. Energy Information Administration (EIA), and citing the closing, the global supply of oil is expected to decline about 5% in 2026 compared to 2025, while global demand remains essentially steady. So it is little surprise that oil is at $100 per barrel, more than 60% above the lows for the year, and is likely to stay elevated for some time, as attacks have damaged gas fields and refineries in Saudi Arabia and Qatar. For 2026, our oil price forecast now calls for an average of $83 per barrel, up from our prior forecast of $75, and our forecast trading range for 2H26 is $75-$120.

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