BofA Raises Second-Half Brent Forecast to $95 Amid Geopolitical Risks
Bank of America has raised its forecast for Brent crude oil in the second half of 2026 to $95 a barrel from $83, citing persistent geopolitical risks and continued uncertainty around oil flows through the Strait of Hormuz.
The revised outlook comes even as Brent prices have recently moved below $100 a barrel. The market is balancing two opposing forces: hopes of improving Gulf supply and diplomacy on one side, and the possibility of prolonged disruptions to critical oil routes on the other.
For investors, BofA's forecast is significant because it suggests the bank expects the geopolitical risk premium in crude to remain elevated rather than disappear quickly.
Why BofA Raised Its Brent Oil Forecast
According to a BofA note dated Monday, analysts raised their second-half Brent forecast by $12 a barrel, from $83 to $95.
The bank estimates that disruptions to oil shipments through the Strait of Hormuz may have reached approximately 14 million barrels per day at their peak, compared with pre-war flows of around 4 million to 8 million barrels per day. Before the conflict, roughly one-fifth of global oil and LNG supplies moved through the strategic waterway.
The Strait has therefore become the central variable for the oil market.
Even if some shipments continue through alternative routes or escorted vessels, the market remains vulnerable to further disruption. BofA analysts said infrastructure damage and heightened tensions could continue limiting flows, while a prolonged disruption extending into next year could push front-month Brent prices higher.
That is the main reason the bank has become more cautious about assuming a rapid normalization in crude markets.
Brent Oil Is Still Below $100, but Supply Risks Remain
The forecast upgrade comes at an interesting point for the oil market.
Brent had traded above $100 for several days as investors assessed the possibility that the Iran conflict could expand across the region. On September 22, however, Brent fell below that level as expectations for a potential improvement in Gulf supply increased.
Reuters reported that Brent crude for November fell 2.1% to $98.23 a barrel, while WTI November futures declined 2.55% to $90.01. Both benchmarks reached their lowest levels since September 8.
One catalyst was an Iranian indication that the Strait of Hormuz could potentially reopen within seven days if U.S. military pressure is eased and the blockade of Iranian ports is lifted.
Saudi Arabia has also restarted its East-West oil pipeline, while exports from the Red Sea port of Yanbu could resume. These developments have helped improve the near-term supply outlook.
But the market has not received confirmation that normal shipping conditions have fully returned.
Hormuz Remains the Biggest Swing Factor
For the global oil market, the Strait of Hormuz is more than another shipping route.
It is a major chokepoint connecting some of the world's largest oil-producing countries with international buyers. Disruption therefore affects not only the amount of crude physically available but also the cost and reliability of transporting it.
When supply becomes uncertain, traders can bid up oil prices even before an actual shortage develops. This additional price component is commonly referred to as a geopolitical risk premium.
The opposite can happen when tensions ease. If traders become confident that shipping will normalize, some of that premium can disappear quickly.
That dynamic was visible on September 22, when reports of a possible reopening of Hormuz helped push Brent lower.
BofA's higher forecast indicates that it does not expect the uncertainty surrounding those flows to be resolved immediately.
Saudi Arabia Is Trying to Reduce the Impact of the Disruption
Saudi Arabia's oil infrastructure is particularly important because the kingdom has alternative routes that can partially reduce its dependence on Hormuz.
The country's East-West Pipeline transports crude across Saudi Arabia toward the Red Sea, allowing some oil to reach international markets without passing through Hormuz.
Reuters reported that Saudi Arabia restarted the pipeline following an earlier disruption and was working toward restoring its capacity. The kingdom also increased crude shipments through Hormuz, with satellite data indicating that recent flows had risen significantly from August levels.
Saudi crude exports had already risen to 4.125 million barrels per day in July, according to Joint Organizations Data Initiative data reported by Reuters, while Saudi oil production increased to 8.135 million bpd from 7.122 million bpd in June.
These figures show that regional supply has not simply disappeared. Instead, the market is dealing with a complicated combination of disrupted routes, alternative infrastructure and changing shipping patterns.
What Higher Brent Prices Could Mean for the Global Economy
A sustained Brent price around $95 would have different effects across the economy.
For oil-producing companies and countries, higher crude prices can increase revenue and cash generation if production volumes remain available.
For oil-consuming industries, the effect can be the opposite.
Airlines, logistics companies, chemicals producers and other fuel-intensive businesses may face higher costs. Higher crude prices can also feed into transportation and manufacturing expenses.
The effect on inflation is particularly important.
If oil remains elevated for an extended period, central banks may face greater difficulty bringing inflation toward their targets. That can influence interest-rate expectations, bond yields and equity-market valuations.
Conversely, a sustained decline in crude prices would remove some pressure from fuel costs and inflation.
India Could Be Particularly Sensitive to Oil Prices
The BofA Brent forecast also matters for Indian investors because India is heavily dependent on imported crude oil.
Higher international oil prices can increase India's import bill and put pressure on the trade balance and the rupee. They can also raise costs for fuel-sensitive companies and potentially complicate the inflation outlook.
The relationship is not uniform across Indian sectors.
Oil producers and some upstream energy businesses can benefit from higher crude prices, while airlines, paints, chemicals, logistics and other energy-intensive businesses may face greater cost pressure.
A sustained oil decline, meanwhile, can have the opposite effect.
The Indian rupee showed some sensitivity to the latest oil move on September 22. Reuters reported that the rupee closed 0.2% higher at 95.59 per dollar, with the decline in Brent helping support the currency, although broader foreign-exchange intervention and market factors also influenced trading.
BofA's Forecast Is Not a Guaranteed Price Target
It is important to distinguish a bank forecast from an expected market outcome.
BofA's $95 second-half Brent estimate represents the analysts' assessment of the likely price environment under their current assumptions. It does not mean Brent will trade at exactly $95 or remain close to that level every day.
Oil prices can move sharply when geopolitical developments change.
A credible reopening of Hormuz and sustained normalization of shipments could reduce the supply risk premium. On the other hand, renewed attacks, infrastructure damage or prolonged disruption could push prices higher.
The market is therefore likely to remain highly sensitive to developments around Iran, Saudi Arabia, Yemen and the major shipping routes.
What Investors Should Watch Next
The next few weeks could be especially important for crude markets.
Investors should monitor:
Actual tanker traffic through the Strait of Hormuz
Developments in U.S.-Iran diplomacy
Saudi East-West Pipeline operations
Saudi crude exports and production
Shipping through the Bab el-Mandeb
Brent-WTI price movements
OPEC+ production decisions
Global oil inventories
Refined-product availability, especially diesel
The key distinction is between headline-driven price movements and genuine improvement in physical supply.
If shipping normalizes and inventories begin rebuilding, crude could face downward pressure despite continued geopolitical uncertainty. If disruptions persist, BofA's higher forecast could prove more relevant as the market continues to price scarcity and transportation risk.
Key Takeaway
Bank of America has raised its second-half 2026 Brent oil forecast to $95 a barrel from $83, reflecting continued geopolitical and supply-chain risks around the Strait of Hormuz.
Brent has recently fallen below $100 as Iran signals a possible reopening of Hormuz and Saudi Arabia restores alternative export infrastructure.
For investors, the most important factor is whether those developments lead to a sustained recovery in global oil flows. Until there is clearer evidence of normalization, crude prices are likely to remain highly sensitive to geopolitical headlines and physical shipping conditions.
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This article is for informational and educational purposes only and should not be considered investment advice.