OCBC's Sim Moh Siong and Christopher Wong note that Oil has surged on escalating US–Iran tensions, lifting the Dollar and pressuring Oil‑importing currencies, with Brent now above USD70/bbl near its highest since June 2025. However, analysts still expect a well‑supplied market and inventory builds to push Brent lower through 2026, forecasting a year‑end bottom near USD59/bbl.

Geopolitical spike but softer 2026 path

"Geopolitics remains front‑and‑centre for FX as oil prices climb on fears of escalating US–Iran tensions."

"Brent is trading above USD70/bbl, nearing its highest level since June 2025, as the US boosts its fighter jet presence in the Middle East."

"According to the Wall Street Journal, regional air power is now at its strongest since the 2003 Iraq invasion. Any conflict would threaten oil shipments from a region supplying roughly one‑third of global output."

"That said, our base case is unchanged: despite potential geopolitical spikes, oil prices are likely to trend lower through 2026 amid a well‑supplied market and expected inventory builds."

"Despite near‑term volatility, we expect Brent to ease later this year as supply remains ample."

"We continue to forecast Brent bottoming near USD59/bbl by year‑end. "

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)