Brent: Updated price paths as Persian Gulf flows shift – ING

ING’s Warren Patterson revises Oil forecasts higher, highlighting tight Brent and refined product markets as Persian Gulf exports remain around half of pre-war levels. The base case sees Brent at $80/bbl in the fourth quarter, with optimistic and pessimistic scenarios spanning $75–104/bbl depending on Hormuz and bypass route disruptions and the timing of any US–Iran agreement.

Three Brent scenarios into year-end

"Nevertheless, Persian Gulf producers appear increasingly willing to move oil through the Strait and offer more barrels outside it. Tracking remains difficult because vessels often switch off transponders during transit. US officials estimate flows near 10m b/d, while shipping trackers put them at 4-8m b/d, with estimates recently edging higher. Because a very large crude carrier can hold about 2m barrels, missing one or two vessels can materially distort daily estimates."

"We assume Hormuz flows of around 5m b/d. Including pipeline bypass volumes, total Persian Gulf oil exports are roughly 50% of pre-war levels."

"Base case: Stalemate persists until shortly before the November US mid-term elections, followed by a limited stabilisation agreement covering Hormuz, military de-escalation and possible sanctions relief. Persian Gulf oil flows remain near 50% of pre-war levels in October, then recover to about 90% by December, including bypass volumes. Brent averages $80/bbl in the fourth quarter, up from our previous forecast of $74/bbl."

"Pessimistic case: Escalation increasingly disrupts Hormuz and bypass routes, leaving year-end flows near 50% of pre-war levels and lifting fourth-quarter Brent to an average of $104/bbl."

"Optimistic case: A September agreement restores flows to pre-war levels by year-end, with Brent averaging $75/bbl in the fourth quarter."