- The base case for crude oil forecasts is for price action to remain choppy as contrasting headlines continue to dominate the newswires.
Crude oil continues to trade in a supply-shock environment, with prices whipsawing widely with every headline that hits the newswires. The choppiness comes amid conflicting headlines that tilt towards a ceasefire in one moment, and renewal of hostilities in another.
Brent crude fell massively on Wednesday, shedding as much as 5% in trading. However, the asset has rebounded as of this Thursday, trading as high as $104.30 per barrel for Brent crude and $92.25 per barrel for WTI. The major price anchor remains the Strait of Hormuz blockade, the biggest oil-market shock factor in decades.
What is Driving Crude Oil Price Forecasts Right Now?
1. Strait of Hormuz Disruption: According to Barclays reports, a prolonged disruption of the Strait of Hormuz could remove up to 14 million barrels per day from supply, representing more than 10% of global demand. Price dips driven by ceasefire hopes have not held firm, as physical flow risk due to the Hormuz disruption remains unresolved, and a ceasefire will not immediately reopen that vital conduit.
2. Ceasefire Proposal Headlines: The latest headlines around the US’s ceasefire proposal led to a sharp selloff in crude oil prices. However, the asset has bounced back, as the latest reports indicate that Iran has rejected these. The pathway to a permanent or at least a long-lasting de-escalation remains uncertain.
3. Hesitant Supply Response: High prices are not motivating producers to churn out more crude oil due to the currently unstable price regime and the Hormuz chokepoint, which prevents the uptake of this supply.
Weekly Brent Crude Oil Price Forecast Scenarios
Base case: crude oil prices remain elevated, albeit in a volatile range that aligns with headline gaps. This assumption means that the price action is expected to be sideways to upward, but in a very choppy fashion. This is the expected scenario as long as the Hormuz blockade remains, which keeps prices above the $100 handle.
Bull case: if the situation escalates or additional information indicates the Hormuz disruption will extend into April, the Brent crude oil price could approach $110, or even higher. A severe supply loss Math boosts this prediction.
Bear case: a sharp pullback towards the $85-$95 zone will result if there is a credible de-escalation trigger and resumption of flows across Hormuz. The base stabilization assumption presented by the Barclays desk is that the Brent crude oil price will settle closer to the $85 mark as the oil shock risk premium fades.
Crude Oil Price Forecasts: Technical Outlook
This week’s 8.26% retreat returns the price to the 98.93 support level. There are two possibilities here. The first is that if the bulls defend this support level, there is a good chance price action will head back north to attempt a reclaim of the $120 price mark and the high of last week. Above this level, the 124.47 resistance and the June 22 high become the next resistance levels.
On the flip side, a breakdown of the 98.93 support sends the price action lower, aiming for the $87.29 support. The January 27 and June 23, 2025, highs at 80.27 form the next plausible target.