(By Oil & Gas 360) – Energy markets are increasingly being driven by geopolitical risk rather than traditional supply-demand fundamentals, and major banks are beginning to adjust their outlooks accordingly.
Investment banks have started lifting crude price forecasts as tensions around the Strait of Hormuz raise the possibility of supply disruptions from one of the world’s most critical energy corridors. Analysts at Goldman Sachs recently raised their second-quarter Brent forecast by $10 per barrel, reflecting the growing risk premium tied to Middle East instability.
Meanwhile, UBS also increased its Brent price outlook for early 2026 and the full year, citing tightening supply conditions and heightened geopolitical uncertainty.
At the center of investor concern is the Strait of Hormuz, a narrow shipping corridor that carries roughly a fifth of the world’s oil and a major share of LNG exports. Analysts at JPMorgan Chase warn that a shutdown of the strait could quickly force major Gulf exporters such as Iraq and Kuwait to curb production within days if tankers are unable to load or depart.
Markets are beginning to price in those risks. Brent crude has already pushed above the $90 per barrel threshold, but several analysts say the market could move significantly higher if tensions escalate or shipping disruptions persist.
Some projections suggest crude could approach $110 per barrel in an extended disruption scenario, while officials in the Gulf have warned that prices could spike far higher if exports are halted.
Production interruptions are already adding to the anxiety. Kuwait has reportedly curtailed some output amid regional security concerns, while Qatar has warned that a prolonged disruption could send oil prices surging to $150 per barrel within weeks.
The broader concern extends beyond the energy sector. According to the International Monetary Fund, a sustained oil price shock would test the resilience of the global economy, particularly as inflation pressures remain sensitive to energy costs.
For capital markets, the situation underscores how quickly geopolitical events can reshape commodity pricing models. Energy equities, shipping companies, and LNG infrastructure operators tend to respond rapidly to higher price expectations, while energy-intensive industries face rising cost pressures.
Whether the current rally becomes a sustained energy shock will depend largely on how events unfold around Hormuz.
For now, markets appear to be pricing risk rather than confirmed supply loss. But with global oil flows heavily dependent on a single corridor, analysts say even the threat of disruption is enough to shift capital market expectations.
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