Oil is trading on a war premium, and most analysis points higher from here.
The dominant view is that crude stays elevated, with the Strait of Hormuz effectively closed and US-Iran tensions escalating. By one estimate, roughly 13% of global supply has been taken offline. Brent briefly touched $115 and WTI pushed above $100, with drone and missile strikes on UAE energy infrastructure — including an ADNOC tanker and the Fujairah port area — adding to the risk premium.
Inventories are the quieter story. Global commercial oil stocks are on track to breach operational stress levels (around 7.6 billion barrels) by mid-June, and strategic reserves are nearly tapped out as a buffer. One description making the rounds: "the mother of all supply shocks," with inventories "on borrowed time." A cyclical read sees prices staying above what futures imply through 2026, keeping inflation stickier in places like Australia.
Not everyone agrees. A small camp sees Brent averaging closer to $85 and prices easing into year-end, conditional on gradual Middle East de-escalation. A more contrarian view argues expanded US output could eventually drag WTI below $60. Recent intraday dips are mostly being read as digestion of the spike, not a trend change.
The real divide isn't bull vs bear — it's how fast you think the conflict resolves.