Analysts predict Brent will rise to $120: geopolitics and supply deficit
The oil market is once again on the verge of significant volatility. Amid the escalation of the conflict in the Middle East and supply disruptions through the Strait of Hormuz, there is a real possibility of Brent prices rising to $120 per barrel in the second half of the year. This means prices could approach the historical high of $126.41, recorded on April 30 amid heightened tensions between the US and Iran.
Two key factors are driving the current rally: a sharp decline in export volumes from the Persian Gulf — more than 45% below pre-war levels — and the ongoing threat of a blockade of the Strait of Hormuz. The situation is exacerbated by potential disruptions in the Red Sea, where Houthi rebels continue to threaten supply routes from Saudi Arabia. All of this shifts the risk balance towards further increases in commodity prices.
Base Scenario: Correction or a New Surge?
The baseline forecast, however, suggests that if the conflict de-escalates, Brent will stabilize around $80 in the fourth quarter and decline to $75 next year. On July 19, at the peak of tensions, the price exceeded $90, but hopes for a truce cooled the market — by July 21, quotes had fallen to $88.47. However, as experts emphasize, the likelihood of a renewed blockade of the strait remains high, making the $120 scenario not merely hypothetical.
The decline in global inventories makes the market extremely vulnerable to new shocks. Slowing imports in China and demand elasticity may limit growth potential, but the current geopolitical premium is already priced in. Concurrently, there is a diesel shortage, problems at refineries in Russia, and a high probability of rising gas prices due to the conflict — all of which create fertile ground for further increases in energy prices.
My opinion: The oil market is currently in a classic "black swan" trap. The geopolitical factor dominates fundamental demand indicators. If the conflict drags on, we will see not just $120, but a test of levels above $130, which will exert powerful inflationary pressure on the global economy and, consequently, on cryptocurrency markets, which often correlate with traditional assets during periods of high uncertainty.