Oil Price Forecast: WTI Near $66, Brent $72 as Trump–Iran Deadline Puts $100 Oil Back in Play

Oil snapshot: WTI CL=F around $66, Brent BZ=F near $72 after a 5% risk-premium week

WTI crude CL=F trades in the mid-$60s, with spot quotes around $65.9–$66.9, while Brent BZ=F holds in the low-$70s around $71–$72. That puts both benchmarks up more than 5% this week, heading for the first weekly gain since January and sitting at roughly six-month highs after a stretch of three consecutive weekly declines. Refined products confirm the move: benchmark gasoline hovers around $1.99 per gallon, while key physical grades such as Louisiana Light trade above $67.5 (up roughly $3 on the day), Bonny Light near $78.6, and the OPEC basket close to $69.8 after a more than 4% daily jump. The forward curve remains in backwardation for both this year and next, meaning prompt barrels command a premium over later delivery and signaling that the physical market is tighter than the recent “oversupply” narrative suggested.

Middle East risk premium: Trump’s 10–15 day Iran deadline and the Strait of Hormuz choke point

The core of the new risk-premium is simple: the White House has put Tehran on a 10–15 day clock to agree to a deal, with explicit warnings that the alternative would be “really bad things.” At the same time, a major U.S. military build-up is underway in the region. The focal point for CL=F and BZ=F is the Strait of Hormuz, the narrow passage through which more than 14 million barrels per day of crude and condensate moved in 2025, roughly one-third of all seaborne oil exports. About three-quarters of those flows go to China, India, Japan and South Korea, which means any disruption instantly becomes a global growth story, not just a regional one. Iran’s Revolutionary Guard has already partially closed the strait for several hours under the cover of military exercises and has signaled publicly that it can shut the passage if it receives the order. Unlike the missile harassment of shipping in the Red Sea, the toolkit here is heavier: substantial coastal batteries, short-range missiles, naval assets and mine stockpiles that can quickly make a narrow waterway uninsurable. Once marine insurers refuse coverage, the effective capacity of the route collapses even without a single ship being sunk, and tanker rates explode higher.

From limited strikes to full disruption: what each scenario means for CL=F and BZ=F

The market is currently pricing something between “surgical strike” and “messy but contained,” not a full-scale regional war. Desk chatter is centered on three broad paths. In a limited-strike scenario, the U.S. focuses on military targets, avoids Iranian export terminals and keeps energy infrastructure off the target list. In that case, the incremental risk premium is driven by headline noise and short-term shipping disruptions rather than outright supply loss. One major U.S. bank estimates that even a sustained removal of around 1 million barrels per day of Iranian exports for a year would likely add around $8 per barrel to global crude benchmarks, pushing WTI CL=F into a $70–75 band and Brent BZ=F into roughly $75–80. A more aggressive escalation, where Iran meaningfully interferes with Hormuz traffic for weeks rather than days, is where the numbers change dramatically. Some energy consultants see a $10–15 per barrel jump in a wider conflict, and in a genuine worst-case of prolonged closure the upside extends to $100+ Brent, with WTI following into the $90s, because the world simply cannot rebalance without that corridor. The current term structure shows that the market is not fully braced for this extreme: backwardation is firm but not yet at outright panic levels, which leaves room for further steepening if tensions cross a red line.

Physical and curve signals: backwardation, grades and why “oversupply” looks overstated

While commentary has been dominated for months by talk of comfortable supply, the signals from the physical market argue otherwise. The ICE Brent curve trades in clear backwardation across the near and medium parts of the strip. That means buyers are paying more for barrels they can lift now than for oil delivered later, an indication that refiners and traders value immediate supply highly. Key physical markers back this up. Louisiana Light trading around $67.6, up more than 4.6% on the day, shows strength in U.S. Gulf Coast sweet grades. The OPEC basket around $69.8, up nearly 4.8%, suggests that medium and heavy blends are not struggling to find a home. Even as headline WTI CL=F sits under $67, spreads and quality differentials point to tightness in particular segments. On the inventory side, a recent U.S. weekly report showed crude stocks plunging after a prior massive build, undercutting the idea that demand is collapsing. At the same time, the shape of the Brent curve “for both this year and next” looks tighter than many models had expected, according to commodity strategists who themselves had leaned bearish into the year. That shift forces a reassessment of supply-demand balances just as geopolitical risk rises.

Russia, Ukraine and Venezuela: slow-motion reshaping of crude and gas flows

The stalemate in talks between Russia and Ukraine keeps the prospect of sanctions relief firmly off the table. Drone strikes on Russian refineries and the need to reroute large volumes of crude and products away from traditional European buyers continue to distort flows and add costs to global logistics. At the same time, the United States is tightening its own enforcement around Venezuelan crude but has opened specific channels under new licenses that allow targeted upstream investments. One major supermajor is moving ahead with the Dragon gas project off Venezuela, a field holding around 4.5 trillion cubic feet of gas that will ultimately feed into an Atlantic LNG facility in Trinidad and Tobago. That plant has a 12 million ton per year liquefaction capacity but only shipped 9 million tons last year due to gas supply shortages, so incremental feedgas from Venezuela will matter. The same company and its partner are also pursuing licenses for cross-border gas fields like Loran-Manatee and Cocuina-Manakin, with combined reserves in the high single-trillion cubic feet range. These moves do not solve near-term crude tightness but they change the medium-term balance between gas and liquids and give Atlantic Basin buyers more flexibility in sourcing energy, indirectly affecting diesel and fuel-oil demand for power in some markets.

Asia’s demand and the reshuffling of barrels: China, India and record imports

On the demand side, Asia’s crude imports are tracking toward a record high in February, even as macro headlines remain noisy. One key driver is China increasing purchases of Russian crude at discounted prices while India pulls back somewhat, a rotation shaped by both politics and refining economics. At the same time, Saudi exports to India have surged to their highest level since 2020, with Riyadh regaining market share that had been ceded during the post-invasion discount window for Russian barrels. That shift matters for benchmarks: Middle Eastern grades priced off Brent BZ=F gain pull from Asia, supporting the front of the curve. In parallel, a report showing global oil demand falling by about 614,000 barrels per day in December – driven by a drop in U.S. consumption – reinforced that the demand story is not one-way. But forward indicators in Asia, including record import bookings and strong refinery runs, offset some of the weakness in Western consumption. Put together, the demand picture is bifurcated: softer in developed markets, still resilient and even expanding in key Asian hubs.

Macro backdrop: tariffs, growth and why $100 oil would hit a softening economy harder

The energy story is now colliding directly with macro. Recent data show U.S. Q4 GDP growing at only 1.4% annualised, badly missing prior estimates, while core inflation still runs near 3%, an uncomfortable combination of slower growth and sticky prices. On the policy front, the Supreme Court’s decision to strike down Trump’s emergency tariffs has removed one tail-risk for global trade but opens the door to a messy battle over up to $175 billion in potential refund claims, creating a new layer of fiscal uncertainty. At the same time, the credit complex is showing stress: one large private credit player has halted redemptions, underscoring liquidity risk in leveraged parts of the market. For CL=F and BZ=F, this means that a sharp jump to $90–100 would hit an economy that is already losing momentum. The higher the crude price goes in this environment, the faster demand starts to adjust, especially in discretionary segments like travel and some industrial activity. That’s the main argument restraining outright speculative bets on triple-digit oil even as geopolitical risks rise.

Fertilizer sanctions, palm oil and cross-commodity inflation pressure

There is another angle to the oil story that isn’t about crude directly but about edible oils and agricultural input costs. Europe has moved aggressively to restrict Russian and Belarusian fertilizer, combining new carbon border levies, escalating tariffs and additional sanctions. Duties that currently sit around €40–45 per ton are scheduled to rise to €315–430 per ton by mid-2028, and a new cap on ammonia imports from Russia is being added under the latest sanctions package. The result is already visible: farm lobbies report that nitrogen fertilizer imports into the EU collapsed from 1.18 million tons in January 2025 to just 179,877 tons in January 2026, a drop of more than 80%, leaving stocks covering only 45–50% of what is needed for the 2026 harvest. The link to oil comes through palm oil and other edible oils. Indonesia, which produces over half of the world’s palm oil, is heavily reliant on potash fertilizers imported from suppliers including Russia and Belarus. Higher potash prices and constrained supply tend to push smallholders to cut application rates, which depresses yields for several seasons, not just one. The last time fertilizer markets were shocked to this degree was 2022, when fertilizer prices jumped 80% in 2021 and another 30% after the Ukraine invasion, prompting Indonesia to ban palm oil exports in April 2022. That move sent the global vegetable oil index up more than 23% in a single month and forced users into alternative oils like soybean and rapeseed. If a similar squeeze develops again, edible oil prices will climb, food inflation will flare, and biofuel economics will shift – all of which feed back into the broader energy complex and can support middle-distillate demand.

Industry response: new fermentation fats, but too small to cap price risk now

The food and ingredients industry is not sitting still. A Dutch biotech group is building a fermentation-based palm oil alternative, claiming up to 90% lower CO₂ emissions and targeting cost parity by 2028, with its first demonstration plant slated for 2026. Other players are developing palm-free emulsifier systems and microalgae-based high-oleic oils. These technologies matter for long-term structural shifts and ESG narratives, but they are not close to displacing tens of millions of tons of tropical oils in the next few years. For the next several pricing cycles, edible oil markets remain exposed to fertilizer shocks, weather risks and trade policy. That means oil-linked inflation is not only a crude story; it runs through diesel, fertilizers, palm oil, packaged foods and, ultimately, consumer inflation expectations – a backdrop that tends to keep CL=F and BZ=F well-supported on dips.

Positioning and sentiment: from three losing weeks to the first weekly gain since January

Before this week’s move, crude had just logged three straight weekly declines, with macro-driven selling and systematic strategies leaning short as recession fears returned and risk assets sold off. The latest rebound – more than 5% with WTI back in the mid-$60s and Brent in the low-$70s – marks the first weekly gain since January and has been driven mainly by geopolitical headlines and a reassessment of physical tightness. Options markets reflect this shift: demand for upside protection has increased, skewing implied volatility higher on calls tied to higher strikes, while near-dated downside protection remains expensive because of macro concerns. The curves show that traders are willing to pay up for near-term barrels but are not yet betting aggressively on a sustained spike deep into 2027–2028. Sentiment sits in an uneasy middle: nobody wants to be short into a headline that closes Hormuz, but many are wary of chasing prices straight into levels that would trigger demand destruction.

Price levels and trade-off: where CL=F and BZ=F can go from here

The key levels are clear. On the downside, the recent range floor for WTI CL=F sits around $60, with the latest support zone in the $63–65 band. For Brent BZ=F, the corresponding reference is the high-$60s, with $70 now acting as a near-term pivot. As long as WTI holds above roughly $63 and Brent above $70, the path of least resistance remains biased upward because the combination of Hormuz risk, backwardated curves, resilient Asian demand and tighter physical spreads outweighs the macro drag. A clean de-escalation in the Middle East, combined with a further slowdown in U.S. growth and continued private-credit stress, would open the door back toward low-$60s WTI and mid-$60s Brent. A step-change escalation – including meaningful disruption to Hormuz traffic – would push the market quickly toward $80–90 WTI and $85–100 Brent, especially if inventories are drawn down further and OPEC+ maintains discipline.

Verdict: Buy – tactically bullish on oil, with WTI CL=F skewed toward $80 and risk line near $60

Given WTI CL=F around $66 and Brent BZ=F near $72, the balance of forces leans to the upside. Geopolitical risk around Iran and Hormuz is rising, the forward curves and physical grades show tighter conditions than the consensus narrative, Asia’s crude imports are strong, sanctions and war keep Russian supply constrained, and cross-commodity pressures from fertilizers and edible oils support the broader energy inflation story. The main counterweight is a slowing U.S. economy and the risk that a crude spike accelerates demand destruction. Weighing these factors, the stance here is Buy / tactically bullish on oil, with a working upside window into the $80–90 zone for WTI over the next few months if tensions stay elevated and no major demand shock appears. The practical risk line sits just below $60 WTI; a sustained break under that level would signal that macro weakness and de-escalation have overwhelmed the current risk-premium and would downgrade the view to Hold.

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