HSBC has adjusted its outlook for Brent crude, raising its average forecast for 2026 to $95 per barrel, the bank said in a note dated May 6. The revision reflects an assumption of an extended effective closure of the Strait of Hormuz, which the bank expects will significantly affect flows from the Gulf.
Under the bank's base timing, HSBC now assumes that traffic through the Strait of Hormuz and Gulf crude output will begin to restart gradually from mid-June. The note projects a return to near-normal system-level production and flows by the end of the third quarter of 2026, contingent on that phased resumption.
HSBC warned that a prolonged disruption would produce larger inventory drawdowns and make the subsequent post-war refill of stockpiles more difficult. The bank also highlighted that such a scenario would leave an elevated residual risk premium in oil prices, supporting a higher long-term price anchor.
To illustrate potential outcomes, the bank set out scenario-based price paths. In a scenario where a deal to reopen flows is only reached towards late summer and oil markets remain sensitive to headline news so that prices periodically correct, HSBC estimates Brent would average around $110 per barrel in 2026 and $85 per barrel in 2027.
In a more pessimistic scenario, in which a comprehensive deal takes roughly six months to materialize and leaves flows heavily constrained, HSBC's projection places the 2026 average for Brent at $120 per barrel, with an average of $95 per barrel in 2027.
These alternative scenarios reflect the bank's view that timing and the degree to which flows are restored will be key determinants of near-term price levels and the shape of the recovery in inventories and market functioning.
Key points
- HSBC raised its 2026 Brent forecast to $95 per barrel in a note dated May 6.
- The bank expects a gradual restart of Strait of Hormuz traffic and Gulf output from mid-June, with near-normal system-level production and flows by end-Q3 2026.
- Scenario analysis shows Brent averaging $110 in 2026 and $85 in 2027 under a late-summer deal that permits periodic headline-driven corrections, and $120 in 2026 and $95 in 2027 under a more constrained, six-month resolution.
Risks and uncertainties
- Extended disruption to Hormuz traffic could cause larger inventory drawdowns and complicate post-conflict refilling of stocks - impacting oil market liquidity and energy market stability.
- Persistence of an elevated residual risk premium would support a higher long-term price anchor, introducing uncertainty for energy-intensive sectors and inflation-sensitive markets.
- The timing and completeness of any deal to reopen flows remain uncertain, producing materially different price trajectories across 2026 and 2027.