Bank of America (BAC) is warning that crude oil prices could reach $150 U.S. a barrel if the Iran war drags on and global inventories continue to be depleted.
The New York-based bank has raised its year-end forecast for Brent crude oil from $83 U.S. a barrel to a new target of $95 U.S. a barrel and issued a stern warning.
“Damaged infrastructure and rising geopolitical tensions make rapid normalization unlikely,” writes Francisco Blanch, head of global commodities at Bank of America, in a note to clients.
The comments from Bank of America come as traffic in the Strait of Hormuz shipping lane near Iran, where 20% of the world’s crude oil is transported, remains severely constrained.
Recent reports say only about two oil tankers a day are traveling through the Strait of Hormuz versus more than a 100 ships a day before the U.S. attacked Iran.
At the same time, Saudi Arabia’s energy infrastructure has been targeted by the Iran-backed Houthi rebels, temporarily bringing some operations to a halt in that country.
Over the last week, crude oil prices neared $110 U.S. a barrel as the situation in the Middle East grows more dire.
However, oil prices are now back below $100 U.S. per barrel amid hopes of renewed peace talks between the U.S. and Iran.
U.S. President Donald Trump has signaled that he would be willing to meet with Iranian government officials at a meeting of the United Nations this week.
Bank of America said challenges are growing to its outlook for oil prices as strategic stockpiles fall around the world, including in the U.S., and markets point to shortages in the near-term.
“If disruptions persist into spring 2027 or oil infrastructure damage intensifies, ICE Brent front month contracts may have to spike well above $150/bbl to curb global oil demand,” writes Bank of America’s Blanch.
Brent crude oil, the international standard, is trading at $98.21 U.S. per barrel on Sept. 22.
