Brent crude rose above $112 on May 18. Then President Donald Trump announced he was postponing a planned strike on Iran. The price fell back below $109 in the same session.
That kind of intraday swing is what the oil market looks like right now. And Bank of America’s Francisco Blanche just explained what the range of outcomes looks like from here.
What Bank of America predicted for Brent crude
Francisco Blanche, head of commodity markets research at Bank of America, outlined three distinct scenarios for Brent crude on May 18, according to Bloomberg.
In the best-case scenario, Brent settles around $90 per barrel by the end of 2026. In the middle scenario, prices climb to $120 to $130 per barrel by the end of June to early July if the double blockade of the Strait of Hormuz by the U.S. and Iran continues. In the worst case, a resumption of hostilities and fresh strikes on oil infrastructure permanently limit supply even after the Strait reopens.
Blanche declined to offer a price benchmark for that scenario, Bloomberg confirmed.
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The most important detail in Blanche’s framing is what he called the best case. At $90 per barrel, his optimistic scenario is 50% above where Brent traded at the start of 2026.
That tells investors something specific: The baseline for oil prices has structurally shifted, and the debate is no longer about whether prices are elevated but by how much and for how long.
Why the global oil market is so sensitive to the Hormuz situation
Blanche’s scenarios are built on a specific supply deficit figure. The global energy market is currently short approximately 14 to 15 million barrels of oil per day, roughly 15% of the volume needed to stabilize prices and return Brent to the $60 to $70 per barrel range, according to Briefs.co.
Before the war, approximately one-fifth of the world’s oil supplies passed through the Strait of Hormuz. The effective closure of that corridor has concentrated supply pressure on the Asia-Pacific region most immediately, but the pricing impact is felt across every market that settles on Brent or WTI benchmarks.
That is why Blanche’s middle scenario can produce a $30 to $40 jump from the best case in a matter of weeks. When physical supply is already running short by 14 to 15 million barrels per day and a key transit route stays closed, the market does not have the buffers to absorb the disruption gradually. It reprices quickly.
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What a diplomatic resolution to Iran war would mean for oil prices
Blanche said resuming oil shipments through the Strait of Hormuz is the best possible outcome for the market. His comments on May 18 came shortly after Iran’s Tasnim news agency reported (according to Bloomberg) that Washington had offered a temporary easing of oil sanctions on Tehran, citing a source close to the Iranian delegation in talks with the United States.
The U.S. did not confirm the report, but such a development would address one of Iran’s key demands for a peace deal and the reopening of the Strait, Oninvest reported.
The same evening that the U.S. was reportedly postponing a planned military strike at the request of several Middle Eastern leaders, the intraday price declined from above $112 to below $109. That single piece of news moving Brent by more than $3 in one session illustrates how much risk premium the market is currently carrying, based purely on conflict expectations rather than confirmed physical supply changes.
Bank of America’s longer-term view assumes the market eventually returns to surplus in 2027 as the conflict eases and supply normalizes. But the bank has already revised its 2026 Brent forecast upward to $77.50 from $61, with a mid-cycle assumption raised to $70, reflecting how much the baseline has moved since the conflict began, Bloomberg confirmed.
Key figures from Bank of America’s May 18 oil market outlook:
- Best-case Brent forecast: Approximately $90 per barrel by end of 2026, according to Bloomberg
- Middle scenario: $120 to $130 per barrel by end of June to early July if double Hormuz blockade continues, Bloomberg confirmed
- Worst case: Resumption of hostilities causes permanent supply damage even after Hormuz reopens; no price benchmark given, Bloomberg noted
- Global supply deficit: Approximately 14 to 15 million barrels per day, roughly 15% of the volume needed to stabilize prices at $60 to $70, according to Briefs.co
- BofA revised 2026 Brent forecast: $77.50 per barrel, up from $61; mid-cycle assumption raised to $70, Investing.com indicated
- Brent on May 18: Rose above $112 before falling below $109 after President Trump postponed planned Iran strike, Bloomberg reported
What Bank of America’s 3 oil scenarios mean for energy investors
Blanche’s framework is useful for investors not because it predicts where oil will go, but because it defines the range of outcomes based on a single variable: how long the Hormuz blockade lasts and whether it escalates further.
In the best case, energy equities benefit from $90 oil but the upside is bounded. In the middle case, upstream producers, commodity traders, and refining names with long crude exposure see meaningful gains as Brent climbs another 30% above the best-case level.
In the worst case, the combination of permanently damaged infrastructure and prolonged disruption creates a scenario that is genuinely difficult to model, which is why Blanche did not offer a price target for it.
For investors tracking the energy trade, the most actionable part of Bank of America’s view is the $77.50 revised full-year forecast. That number is already embedded in the bank’s existing models and represents the floor of its base case before conflict escalation or prolonged blockade scenarios apply.
If diplomatic progress materializes and Hormuz begins to normalize, the market’s trajectory runs toward that base case. If it does not, Blanche’s middle and worst cases define what comes next.
