Fitch sees average Brent crude oil price at $63/bbl for 2026 despite the Middle East crisis; here is why
At a time when the West Asia conflict spiking prices of global oil and natural gas, the rating agency – Fitch Ratings has said that the $63 per barrel (bbl) estimation for average Brent crude price for 2026 is unlikely to see any significant upside as the Strait of Hormuz closure would be only temporary and global oil market oversupply should limit oil price rises. It noted that the strait is not formally closed but vessels are increasingly avoiding it given the risk of attack by Iran or its proxies. Oil majors have halted shipments for safety reasons, and insurers are cancelling war risk cover for vessels. The Strait of Hormuz is a narrow 33-kilometre passage connecting the Persian Gulf to the Arabian Sea, and prior to the conflict, around 20 million barrels per day (MMbpd) of crude oil and petroleum products transited the strait, accounting for about a quarter of global seaborne oil trade and a fifth of global oil consumption. Fitch highlighted that oil exports from Saudi Arabia and the UAE accounts for around half of the oil volumes transported through the strait, with the remainder from Iraq, Kuwait and Iran, and around half of these exports go to China and India. It expects the global oil market to remain over supplied in 2026. It emphasized that any potential supply disruption would be offset by global market oversupply. It pointed that the global supply growth exceeded demand growth in 2025 with supply increasing by around 3MMbpd against below 1MMbpd demand growth. Besides, Iran accounts only for about 3.5% of global crude oil production, producing about 3.5 MMbpd and exporting about 2 MMbpd. However, it noted that the duration and intensity of the increasingly regional conflict remain uncertain, and oil price volatility would rise if there were to be any material disruption to Iranian oil production.
Qatar Leases Tankers as LNG Market Hits Crisis Mode
Qatar has offered two LNG carriers for lease amid a vessel crunch in the liquefied natural gas market and soaring daily rates, Bloomberg has reported, citing unnamed trading sources. The LNG carriers are off the west coast of Africa, the report noted. Qatar’s offer follows a massive surge in LNG tanker rates because of the traffic disruption in the Strait of Hormuz. This has seen charter rates for the vessels go from about $40,000 per day last week to as much as $300,000 per day on the route between the U.S. Gulf Coast and Europe. Rates on the Gulf Coast-Asia route have also surge by a comparable rate, from some $42,000 per day to $300,000 per day. Earlier in the week, QatarEnergy suspended production of liquefied gas at the world’s largest plant following strikes by Iran. Restarting production could take weeks, provided that military action ends. The company then promptly issued a force majeure declaration suspending exports of the energy commodity. QatarEnergy, together with the UAE, produces a fifth of the world’s liquefied gas. The Ras Laffan LNG facility in Qatar was built to process gas from the massive North Field that is shared with Iran. Since the early 2010s, Qatar has dominated global LNG in a way that today’s U.S. or Australian supply can’t match in single-source volume, and the world has priced and planned accordingly. While Asia receives the overwhelming majority of Qatari LNG, Europe is feeling the effect of the Hormuz crisis as acutely as Asia as the global market tightens, and the Asian LNG price premium over European prices soars, re-directing the available spot supply to the Asian importers. “There’s no spare capacity in the LNG market, so the disruption could be immediate and immense,” Claire Jungman, Director of Maritime Risk & Intelligence at energy market analytics firm Vortexa, said earlier this week.
How Quickly Can Qatar Restart the World’s Largest LNG Export Hub?
QatarEnergy declared force majeure on liquefied natural gas (LNG) exports on Wednesday, following disruptions at its Ras Laffan industrial city facilities caused by the Middle East conflict. This legal declaration effectively releases the state-owned company from contractual delivery obligations due to extraordinary circumstances beyond its control. The shutdown was triggered by a near-complete halt of shipping in the Strait of Hormuz due to the U.S.-Israeli conflict with Iran. Qatar accounts for 20% of global LNG exports, primarily serving Asian markets including China, Japan, India and South Korea as well as Europe. Unfortunately for gas customers, it could take months before the giant LNG plant returns to normal production. U.S. President Donald Trump initially projected that Operation Epic Fury would last only four to five weeks, but later announced that the U.S. has the capability to go “far longer”. His ally in the war, Israeli Prime Minister Benjamin Netanyahu, has described the campaign as “quick and decisive action” that may “take some time” but will not last for years. The Trump administration has outlined four core goals: destroying Iran’s missile and naval capacities, ensuring it never obtains a nuclear weapon, and stopping it from funding regional militant groups. Last year’s Operation Midnight Hammer only lasted for 12 days, and only elicited a symbolic response from Iran. However, Iran has been much more aggressive this time around, following the death of Supreme Leader Ayatollah Ali Khamenei, launching widespread and intense retaliatory attacks across the Middle East. Tehran has fired hundreds of Shahed drones and high-speed ballistic missiles targeting Israel and multiple U.S.-allied Gulf nations, including the UAE, Saudi Arabia, Kuwait, Bahrain, Qatar and Oman. The Islamic Revolutionary Guard Corps (IRGC) declared the Strait of Hormuz closed and warned of attacks on vessels, forcing a halt to major oil/gas flows and causing global shipping to seek alternative routes. The situation is exacerbated by the slow process of re-opening giant LNG plants once shut down. Qatar’s Ras Laffan Industrial City serves as the primary hub for the country’s massive LNG operations, and is home to the world’s LNG export complex. The city’s LNG plant features 14 LNG trains with a production capacity of approximately 77 million metric tonnes per year (mtpa). The city’s port has six LNG berths, designed to accommodate the world’s largest LNG carriers, including QMax and QFlex vessels. The plant’s storage tanks have a capacity of ~1,880,000 cubic meters, with additional storage tanks and berths currently being built to handle up to 126 million tonnes per year by 2027. The plant’s current storage takes only 4 days to fill up at full production rates, forcing production to rapidly come to a halt whenever export vessels cannot leave. Once the restart process begins, it will take another two weeks for the facility to reach full operational capacity. Restarting is intentionally slow to avoid “thermal shock” to critical, sub-zero cryogenic equipment. LNG production involves extremely low temperatures (-160 °C or -260 F). Rapidly introducing feed gas into cold, idle equipment can cause severe stress, damaging or rupturing vital, expensive components. Additionally, trains cannot restart simultaneously; they must be brought back online sequentially to ensure stability. And, all this means that global gas markets will be in a significant deficit for several weeks, at the very least. The halt in Qatari LNG production due to security concerns in the Strait of Hormuz has intensified competition between Atlantic and Pacific basins, sending European (TTF) and Asian gas prices up by nearly 50%. “Nothing can replace Qatari LNG. If the shutdown is prolonged, it portends a larger gas market shock than in 2022 when Russian turned off pipeline gas to Europe. Gas prices could retest their record highs set in 2022,” Saul Kavonic, head of energy research at MST Marquee, told Reuters. Unfortunately, the United States, the world’s largest LNG producer, has little immediate spare export capacity to offset major supply disruptions, with only ~ 5% of additional volume available. U.S. LNG export plants are currently running near full capacity, with most production locked in long-term contracts. However, several major LNG export plants are under construction in the U.S. Gulf Coast region, targeting significant capacity increases by 2030. Key active projects include the massive Plaquemines LNG (Louisiana), Cheniere’s Corpus Christi Stage 3 (Texas), Golden Pass LNG (Texas), Rio Grande LNG (Texas), Port Arthur LNG (Texas), and the newly initiated Louisiana LNG project. Together, these LNG plants will add over 65 million tonnes per annum (mtpa) of nominal LNG capacity, or roughly 60% of the country’s current capacity.
Two Russian Urals Tankers Divert 14 Million Barrels to Indian Ports
Two tankers carrying Russian crude initially to East Asia have now diverted to India, Bloomberg has reported, as Asia grapples with an oil supply crunch amid the Strait of Hormuz traffic freeze. The two vessels are carrying some 1.4 million barrels of Urals and are expected to arrive at their new destinations by the end of the week, the report said, citing ship-tracking data from Kpler and Vortexa. In fact, one of them, a Suezmax carrying 730,000 barrels of Urals, has already arrived at a port on India’s east coast. The other, an Aframax with a cargo of 700,000 barrels, is seen arriving at Vadinar, on India’s west coast, today. Earlier this week, Bloomberg again reported that India was considering returning to buying Russian crude amassed in floating storage in Asia as the war in Iran and Tehran’s retaliatory strikes in the region have severely disrupted oil flows from the Middle East. The state-held refiners of India, the world’s third-largest oil importer, and Indian government officials met over the weekend to discuss emergency supply plans following the major escalation in the Middle East. These plans include a potential return of Indian refiners purchasing Russian oil, sources with knowledge of the discussions told Bloomberg. Indian refiners sharply reduced their intake of Russian oil following the imposition of sanctions by the United States on Russia’s two biggest exporters—Rosneft and Lukoil—last November. As a result, flows fell to 1.2 million barrels daily in December 2025. This was the lowest daily rate since 2022, with volumes falling further to barely over 1.1 million barrels daily in January. The rate remained flat in February, according to Vortexa, which noted that Indian refiners had diversified away from Russian crude with Middle Eastern grades—the ones currently paralysed by the Strait of Hormuz crisis.
West Asia conflict hits India’s LNG supplies as Petronet, QatarEnergy issue force majeure notices
Amid the ongoing West Asia conflict and the heavy disruption in vessel transit through the critical chokepoint of the Strait of Hormuz, India’s largest importer of liquefied natural gas (LNG) Petronet LNG has issued force majeure notices to its key supplier QatarEnergy, and its off-takers GAIL (India), Indian Oil Corporation, and Bharat Petroleum Corporation. Moreover, QatarEnergy has also issued a notice indicating a potential force majeure due to the conflict, which has forced the LNG producer to halt production. These force majeure notices are indicative of an LNG supply cut, and according to sources, gas supplies to industries in India have been reduced in the anticipation of tighter LNG deliveries to the country amid the West Asia crisis. Shares of Petronet LNG tanked nearly 12% on Wednesday morning, before recovering slightly. Shares of other oil and gas companies with exposure to LNG—like GAIL, Indian Oil, Bharat Petroleum, Mahanagar Gas, and Indraprastha Gas—fell notably. Force majeure is a clause in contracts that frees parties from liability or obligation when an extraordinary and unforeseeable event beyond their control occurs. Such events commonly include wars, strikes, riots, epidemics, and natural disasters. In this specific case, the force majeure notices indicate that Petronet LNG is unable to lift LNG cargoes from Qatar and supply the contracted quantities to its off-takers, and Qatar—India’s largest LNG supplier—is unable to fulfil its supply obligation. Petronet LNG has long-term contracts to buy 8.5 million tonnes per annum (mtpa) of Qatari LNG. It also buys additional LNG volumes from Qatar from the spot market. Other Indian oil and gas companies also buy LNG from the UAE. In all, India imports around 27 mtpa of LNG from various sources, over half of which comes from the Gulf region.
StanChart Hikes Oil Price Forecast To $74 Per Barrel Amid Iran Conflict
Iran has launched a massive retaliatory campaign following joint U.S. and Israeli airstrikes, sending an unprecedented barrage of more than 500 ballistic missiles and 2,000 drones across targets in Israel and several Gulf states. A drone strike on a command center killed six U.S. service members in Kuwait while several missiles were intercepted near Al Udeid Air Base, the largest U.S. base in the region. Commodity analysts at Standard Chartered have hiked their oil price forecasts, noting that unlike last year’s largely symbolic response, Iran’s much broader approach in the fresh conflict have resulted in several regional flashpoints that pose real risk to oil supply flows, including potential contagion affecting US-operated assets. StanChart now sees Brent crude averaging $74 per barrel in the first quarter of 2026, up from its previous forecast of $62 per barrel; Q2 to $67/bbl (from $63/bbl) and 2026 average to $70/bbl (from $63.50/bbl). The analysts add that there’s asymmetric upside risk to these forecasts if the conflict escalates further and impairs production from Iran and any of the regional producers. StanChart has flagged the significant risk posed to Iraq’s oil flows thanks to its heavy reliance on transit through the Strait of Hormuz. Iraq has begun to shut in some major oil fields, such as Rumaila, and cut back production at others, such as West Qurna 2, with storage tanks reaching capacity. The Strait of Hormuz remains the biggest flashpoint, with the waterway used for energy transit of ~31% of seaborne crude and condensate. This is mostly destined for China and India, which may turn to Russia for alternative supply. In addition, it’s used for 19% of LNG (including all supply from Qatar), 19% of jet fuel and kerosene tilted towards European supply and 33% of global fertiliser transit. Whereas no barrels have been lost so far, StanChart notes that the risk to vessels from mines or missiles has increased insurance premiums and supertanker shipping costs dramatically. To wit, supertanker freight rates from the Middle East to China on the TD3 route now exceed $400,000 per day, double the rate from 27 February, which was already a six-year high. That rate now includes war-risk bonuses and hazard pay for crews, with the exorbitant costs making it uneconomical for the majority of companies. According to StanChart, tanker tracking suggests that limited transit is skewed towards Iranian on Chinese vessels, and this could trigger a rise in landed crude costs–even if the flat price stabilizes–if the freight premium is retained for prolonged periods of time and becomes a structural rather than a temporary cost. That said, there are mitigating factors that could help check oil prices. According to StanChart, there is limited infrastructure in place to allow a bypass of the Strait of Hormuz and provide some relief to disruption to crude flows. Saudi Arabia and the UAE have pipelines that usually operate at less than full capacity, giving an estimated 2.6 million barrels per day (mb/d) of spare capacity to redirect exports. This includes: Unfortunately, alternative routes for refined products and LNG are significantly more limited. Natural gas prices have spiked after QatarEnergy declared force majeure on LNG deliveries on Monday, taking about 20% of global LNG production offline, the vast majority of which goes to Asian customers. Coupled with the shutdown of some Israeli fields, this has exposed the structural vulnerability of the LNG market, leaving buyers scrambling for spot cargoes. This panic buying of JKM to cover lost cargoes pushed it to its highest premium over the Dutch Title Transfer Facility (TTF) since 2021. European natural gas futures pulled back nearly 10% on Wednesday to trade at €49.7 per megawatt-hour after vaulting nearly 60% over the prior two sessions. However, U.S. gas markets remain well insulated, with Henry Hub gas prices falling 3.3% to trade at $2.95/MMBtu on Wednesday.
PEC+ to consider 137,000 bpd oil output increase for April, sources say
OPEC+ will likely consider raising its oil output by 137,000 barrels per day for April to end a three-month pause in production increases, three sources with knowledge of OPEC+ thinking said, as the group prepares for peak summer demand and tensions between the U.S. and OPEC member Iran boost prices. The resumption would allow OPEC leader Saudi Arabia and fellow members, such as the UAE, to regain market share at a time other OPEC+ members, such as Russia and Iran, contend with Western sanctions and Kazakh output is recovering from a series of setbacks. Eight OPEC+ producers – Saudi Arabia, Russia, the United Arab Emirates, Kazakhstan, Kuwait, Iraq, Algeria and Oman – meet on March.
Oil Prices Set for Weekly Decline as Risk Premium Eases
Crude oil prices were on course for their first weekly decline in four weeks as the United States and Iran signaled they were willing to continue negotiating instead of escalating to a hot war. At the time of writing, Brent crude was trading at $71 per barrel, with West Texas Intermediate at $65.56 per barrel, after three weeks of gains. Brent crude has gained more than $3 per barrel over the past four weeks, and WTI is also up by some $3 per barrel. “Traders are in wait-and-see mode heading into the weekend with Iran tensions mounting on one hand, and the OPEC+ meeting on Sunday with a likely production hike on the other hand,” Sparta Commodities analyst June Goh said, as quoted by Reuters. The latest round of talks between the United States and Iran took place on Thursday, concluding without a deal but with “significant progress” and plans to meet again soon—likely as soon as next week, according to the mediator in the Geneva negotiations, Omani Foreign Minister Badr Albusaidi. The Saudi Gazette reported, however, that Iran’s government had said before the talks had ended that it planned to continue its uranium enrichment program and disagreed with the suggestion of moving that program abroad. Before the outcome of the Thursday talks was made public, ING commodity strategists said in a note that “A constructive resolution would likely prompt the market to gradually unwind as much as a $10/bbl risk premium, which we believe is currently priced in. If talks break down, the upside risk remains, but the market may hold off on a full reaction until the scale of potential US action against Iran becomes clearer.” U.S. President Donald Trump has given Iran until the end of next week to agree to a nuclear deal, threatening military action if the deadline is not met by the Iranian side.
Trump Administration Reopens Door to Offshore Oil Leasing in California
Federal regulators have officially reopened a door California politicians have spent years trying to weld shut. The Bureau of Ocean Energy Management on Thursday announced it will prepare a programmatic environmental impact statement for potential oil and gas lease sales in the Northern, Central, and Southern California program areas, launching the first formal step required under NEPA. Translation: California’s offshore leasing conversation is no longer theoretical. The notice covers roughly 11,876 lease blocks spanning about 65 million acres of the Pacific Outer Continental Shelf. The proposal stems from the draft 11th National OCS Leasing Program, which contemplates one sale in Northern California, two in Central California, and three in Southern California. The BOEM says the purpose is to provide access to blocks that may contain economically recoverable oil and gas. Acting Director Matt Giacona framed the move in pocketbook terms, citing California’s energy affordability crunch and national energy security goals. For the industry, the immediate impact is procedural. This is scoping, not spudding. Even under an aggressive timeline, any lease sale would be years away from first oil. California’s offshore output today is a rounding error compared to the Gulf of Mexico. But strategically, it matters. California currently imports the majority of its crude oil from Iraq, Saudi Arabia, Ecuador, and Brazil. If even a part of this offshore acreage proves viable, it could marginally offset imports and stabilize in-state refinery supply. It is unlikely, however, to move global benchmarks. It would not flip the U.S. export balance. But it could reduce dependence on long-haul foreign barrels feeding West Coast refiners. The BOEM is also weighing alternatives, including a no-sale option and a narrower sale limited to areas near existing Southern California infrastructure. Opposition from Sacramento is fierce and litigation is a near certainty. Still, the signal to markets is that federal energy policy is tilting toward supply. Whether California’s coastline actually sees new rigs is another story entirely.
OPEC+ To Consider Oil Output Hike By 137,000 bpd For April
OPEC+ is likely to consider increasing oil output by 137,000 barrels per day (bpd) for April 2026, ending a three-month pause in hikes as they prepare for peak summer demand and navigate market share strategies, Bloomberg reported on Wednesday ahead of a scheduled cartel meeting on March 1. The group had previously implemented 137,000 bpd hikes in late 2025 before pausing increases for the first quarter of 2026 in a bid to avoid creating a supply surplus. Unwinding previous output cuts will allow key members such as Saudi Arabia and the UAE to claw back some market share at a time when oil prices are supported by ongoing tensions between the U.S. and Iran. Oil prices have been surging in response to growing U.S.-Iran tensions, with Brent crude jumping to a seven-month high above $71 per barrel. Fears of military action and potential supply disruptions have triggered volatility despite broader, ongoing concerns about a global oil surplus. The tensions have added a $3–$4 per barrel risk premium to U.S. crude prices; however, analysts have warned that oil prices could move higher if conflicts move from rhetoric to action. Analysts from Barclays see prices jumping to the $80 per barrel range in a scenario where the U.S. targets military or government leadership but avoids strikes on Iran’s oil infrastructure. Rystad Energy sees a temporary spike of $10 to $15 per barrel in a wider but not catastrophic conflict if an attack is short-lived and does not cause major supply interruptions. Barclays, however, has predicted that strikes targeting Iranian production fields or export terminals could drive prices towards $100 per barrel. Last year, JPMorgan predicted an oil price spike to $130 in a “worst-case scenario” if Iran blockades vital chokepoints such as the Strait of Hormuz. The Strait of Hormuz is considered the world’s most critical oil chokepoint, with ~20-30% of global seaborne oil passing through it everyday. The chokepoint is the only direct maritime link from the Persian Gulf to the open sea, making it vital for exporting oil from Saudi Arabia, Iran, Iraq, Kuwait and the UAE to Asia and the rest of the world.