Brent crude oil prices are expected to remain above US$100 per barrel and could increase further if tensions between the United States and Iran continue to disrupt supplies through the Strait of Hormuz, according to recent industry forecasts. Analysts highlight the standoff as a critical factor influencing global oil markets amid ongoing geopolitical uncertainties.

BMI Research, a division of Fitch Solutions, revised its Brent crude forecasts upward after delaying its prediction for a preliminary US-Iran agreement and easing of Strait of Hormuz disruptions to early 2027. The firm now projects Brent futures to average US$107 per barrel in the final quarter of 2026 and rise to US$112 in the first quarter of 2027. These revisions reflect expectations of sustained strong crude demand combined with constrained supply, which are eroding physical market buffers and increasing susceptibility to geopolitical shocks and unplanned outages.

In September, Brent crude prices fluctuated between US$100 and US$110 per barrel, demonstrating the market's sensitivity to ongoing geopolitical tensions. Meanwhile, Kenanga Research also raised its Brent price outlook, forecasting averages of US$91 per barrel for 2026 and US$85 for 2027, up from previous estimates of US$80 and US$74 respectively. Kenanga Research noted that while a near-term resolution appears unlikely, a partial US-Iran deal might be reached in 2027, although negotiations on more complex issues, such as nuclear concerns, could extend beyond that year. The firm incorporated a US$5 per barrel geopolitical premium into its 2027 forecast to account for persistent Middle East tensions.

Further complicating the supply outlook, BMI Research pointed out that although the ongoing conflicts—including the Russia-Ukraine war—have affected economic activity and fuel demand, refiners continue to require substantial crude volumes. Government measures aimed at cushioning consumers from higher energy costs have limited declines in demand, intensifying price pressures in downstream fuel markets. On the supply side, spare production capacity outside the Middle East Gulf is largely depleted, with few new greenfield projects expected in the near term.

BMI Research anticipates a structural shift once a preliminary US-Iran deal is finalized, forecasting a significant price correction with Brent futures potentially falling to an average of US$77 in the second quarter of 2027 and declining further in subsequent quarters. This anticipated selloff is expected to be driven partly by market sentiment and partly by fundamental oversupply, as Middle East Gulf producers operate below capacity but may increase output cautiously to maintain price stability. The research group projected production growth averaging 2.3% annually against consumption growth of just 0.7% over a three-year horizon, reflecting decelerating global demand amid efforts to enhance energy efficiency, expand electrification, and transition to lower-carbon energy sources.

Focusing on Malaysia, Kenanga Research indicated that the rise in crude oil prices could stimulate a recovery in upstream oil and gas spending starting in 2027. Although the current price rally is unlikely to lead to a prolonged upcycle, the firm anticipates a potential two-year increase in capital expenditure (capex) in upstream services, recommending investors begin positioning accordingly. Malaysian national oil company Petroliam Nasional Bhd (PETRONAS) is expected to increase upstream spending in 2027, driven by operational transitions completing by the end of 2026, with capex peaking in 2028 barring unforeseen macroeconomic disruptions. This pattern aligns with historical trends where PETRONAS’ upstream capex typically lags crude prices by up to two years.

Economist Carmelo Ferlito, CEO of the Center for Market Education, cautioned that sustained oil prices above US$100 per barrel could negatively affect Malaysia’s domestic demand and economic growth by increasing costs in transport, logistics, and production sectors. However, he warned against reinstating broad energy subsidies, which can distort market signals and discourage efficiency investments. Instead, Ferlito advocated for a gradual shift away from universal subsidies towards targeted assistance for vulnerable households and a longer-term move to fully market-determined energy prices. He emphasized that protecting the entire economy from international oil price fluctuations is neither economically sound nor sustainable.