BAKU, Azerbaijan, October 5. Fitch Solutions has raised its forecast for the average price of Brent crude futures in 2026 from $83 to $93 per barrel and its 2027 forecast from $71 to $81 per barrel.
According to the Fitch Solutions forecast, the revision reflects a change in expectations regarding the US-Iran war. While analysts previously expected a preliminary agreement to reopen the Strait of Hormuz to be reached in the third quarter of 2026, they now consider such an agreement unlikely before the first quarter of 2027.
Under Fitch Solutions’ scenario, the probability of a preliminary agreement being reached is estimated at 70%.
“The probability of it being reached in the fourth quarter of 2026 is 25%, in the first quarter of 2027 is 40%, and in the second quarter of 2027 is 5%,” the forecast said.
“The probability of escalation is estimated at 30%. This scenario assumes a return to high-intensity hostilities in the Middle East.
Two further scenarios are also considered after a preliminary agreement is reached. The probability of a final agreement is estimated at 40%, assuming that the preliminary agreement remains in place, the situation in the Strait of Hormuz gradually normalizes, and negotiations on long-term issues, including the nuclear program and sanctions, continue.
The probability of a Stop-Start Cycle scenario, involving periodic breakdowns and resumption of negotiations, is estimated at 30%. It assumes violations of the preliminary agreement or an end to negotiations on a final agreement, followed by a return to difficult negotiations or escalation,” Fitch Solutions said.
Fitch Solutions expects continued disruptions to regional oil supplies to put upward pressure on prices over the next three to six months. Analysts estimate that the situation will be exacerbated by ongoing supply constraints related to the Russia-Ukraine conflict.
“Depleting inventories, high refining margins and expectations of a longer conflict will encourage refiners to increase utilization rates, boosting demand for crude oil.
“At the same time, limited releases from strategic reserves and new production capacity will be insufficient to eliminate the ongoing deficit, while global inventories will continue to decline.
“As a result, prices will move higher in a zigzag pattern, with recurring cycles of escalation and de-escalation between Washington and Tehran occurring against a backdrop of gradually declining inventories and fewer fundamental factors limiting further price increases,” Fitch Solutions said.
Fitch Solutions now forecasts an average Brent price of $107 per barrel in the fourth quarter of 2026 and $112 per barrel in the first quarter of 2027, compared with $91 per barrel in the third quarter of 2026 and $89 per barrel on average year-to-date.
According to the forecast, rising demand for crude oil and continued supply constraints will reduce available physical-market inventories, increasing Brent’s sensitivity to new geopolitical flare-ups and unplanned production disruptions.
“For most of September, the front-month Brent futures contract traded in a range of $100–$110 per barrel. The price reached a high of $108.8 per barrel at the close on September 15, before falling to $104 on September 30.
“The shift to the December contract as the front-month contract, along with a series of negative market developments, pushed Brent below $100 per barrel in intraday trading on October 1. By the end of the day, the price had risen back above $102 per barrel,” Fitch Solutions said.
Fitch Solutions noted a significant divergence in assessments of the state of the oil market, with some participants pointing to extremely tight supply while others expect a surplus.
“According to analysts, market sentiment has gradually become more bullish on prices in recent months. The ratio of asset managers’ long to short positions in Brent futures increased from 1.6 in early July to 4.1 in mid-September. However, the recent shift in market positioning and the decline in prices since mid-September create risks for the short-term forecast.
“Current Brent price dynamics indicate market weakness, while the futures curve remains in pronounced backwardation, which typically signals tight supply in the near-term market.
“In addition, physically delivered contracts are once again trading at a substantial premium to the futures market, which analysts say also points to tight fundamentals.
“Fitch Solutions attributes part of the recent decline in the front-month Brent futures price to the resumption of operations on the East-West pipeline and renewed optimism over the prospects for a US-Iran agreement.
“This is part of the fluctuations that Fitch Solutions’ country-risk analysts expect during the conflict, as Washington and Tehran alternate between escalation and diplomatic efforts, with oil markets responding accordingly,” the forecast said.
According to Fitch Solutions, if analysts’ fundamental assumptions prove correct, the factors that have so far limited a stronger rise in Brent prices will gradually weaken. New cycles will be characterized by progressively higher price highs and lows amid an increasing risk of further disruptions to physical oil supplies.
