ANZ: Oil Market Balance More Fragile, Brent Forecast Raised to $105

According to Jin10, Australia and New Zealand Banking Group strategists including Daniel Hynes and Sonali Kumari said the oil market’s supply-demand balance is more fragile than it was at the start of the Middle East conflict, and any escalation after the U.S. midterm elections would push oil prices higher. Assuming hostilities in the Middle East do not escalate further, they expect Brent crude to reach $105 per barrel by year-end, up from their previous forecast of $95. The forecast is based on current oil-market constraints persisting through year-end, not on another geopolitical shock. Oil flows through the Strait of Hormuz have largely recovered, but actual transport efficiency has fallen to about 60% of pre-war levels. Even if logistics do not deteriorate further, tight deliveries, particularly shipping, will make it difficult for the market to rebuild inventories. Strategic oil stocks have also been drawn down, while potential demand may be stronger than expected. Global crude inventory cover is currently about 41 days, down from 45 days earlier this year. Improved oil supply could release some demand previously constrained by shortages, high freight rates, or trade and refining bottlenecks.