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Sberbank Expects 'Tail' of Oil Demand After Middle East Conflict
"Stocks at the Cushing hub (the main oil hub in the U.S.) have fallen to physical minimum levels, and it will take years to replenish them. China has reduced imports by 5 million barrels per day, and it too will undergo a cycle of rebuilding corporate and sovereign reserves," noted Isakov. This will result in a shortage in the oil market during the second half of 2026 and part of 2027, with Brent prices expected to remain around $75–80 for the next year and a half, according to the expert. Isakov aptly describes oil price dynamics with the phrase "Rise like a rocket, fall like a feather."
Against the backdrop of the blockade of the Strait of Hormuz and mutual strikes by the U.S. and Iran on energy infrastructure, Brent crude prices reached $126.4 per barrel by the end of April. Prior to the escalation of conflict, oil was priced at $72.5 per barrel. As of June 26, August futures for Brent oil were trading between $72.3 and $75.1 per barrel, according to ICE exchange data.
In addition to the need to replenish stocks in countries where oil reserves have reached their lowest levels in decades, there is also the factor of production infrastructure in the Middle East, points out Dmitry Kasatkin, partner at Kasatkin Consulting. One part of the production process has been disrupted, while another has been put into conservation. This has further contributed to the shortage and increased prices in the oil market. According to Kasatkin, the process of recovery will take between three months to six months. Concerns primarily relate to demand in the real sectors of the economy, claims the expert. In Asia, for example, demand has already significantly slowed. Nonetheless, by the end of the year, the average price for Brent is expected to hover around $80 per barrel.
According to the consensus forecast from consulting firm Kept, the average price for Brent oil will rise by approximately 14% in 2026 compared to the previous year, reaching $78.6 per barrel (Vedomosti reported on this on May 19). After the Strait of Hormuz is reopened, it will take time to repair the infrastructure and restore tanker routes. As a result, the price premium on oil is expected to persist in the market for at least one more quarter following the blockade's removal, Kept indicates.
The company forecasts that the repercussions of the conflict in the Persian Gulf will continue into 2027. Oil prices are expected to stabilize closer to 2028, analysts note. In 2027, the price is forecasted to be $69.8 per barrel, and in 2028, it will be $67.7 per barrel.
The market responds not so much to the balance of supply and demand as to the resumption of transit through the Strait of Hormuz, notes Sergey Tereshkin, CEO of Open Oil Market. If the situation in the Middle East stabilizes, Brent prices are expected to fall below $75 per barrel in the second half of the year, he believes.
The market is already discussing the possibility of Iraq exiting OPEC+: such a scenario is quite likely, considering that Iraq has long been the main "violator" of the deal's terms, participating only formally, he reminds us. Moreover, the likely increase in quotas for the remaining OPEC+ member countries, including Saudi Arabia and Kuwait, will also play a significant role, Tereshkin adds. An increase in supply will exert downward pressure on prices.
Other Consequences
The primary losers from the conflict have been those states that lack the ability to absorb shocks through temporary budget deficit expansion, Isakov explained. Developing countries in Southeast Asia—importers of energy resources—have been hit the hardest, he noted.
Among corporations, the biggest losses have been borne by those that did not hedge their commodity risks, the expert added. The fact that the shocks of 2025 did not lead to serious and sustainable increases in oil prices led some companies to mistakenly bet on a continued permanent decline in global volatility in 2026. The price of that mistake has been substantial—several airlines have gone bankrupt, Isakov reported.
The situation in the oil market has already led to an increase in inflation in European countries, Isakov reminds us. Annual inflation in the Eurozone rose to 3% in April and 3.2% in May—significantly above the target of 2%. There is a considerable variation among countries: inflation in Germany and France remains below the average (2.9% and 2.5%, respectively), while it is primarily the smaller countries on the periphery—Romania, Bulgaria, Croatia—that are pulling up the overall indicator. Energy resources have played a central role in the inflation increase, the expert emphasizes.
For the U.S., which unlike Europe is a net exporter of resources, the conflict provided an opportunity to maintain interest rates. However, for the American economy, the internal investment cycle in AI is even more significant than oil, underscoring that oil is largely a political issue, Isakov emphasized. The overheating of the U.S. economy is largely influenced by the enormous internal investment cycle in AI, which requires massive imports of equipment and materials from around the globe. The structure of U.S. imports demonstrates polarization, the expert explains. Non-AI-related purchases are indeed declining, as would be expected at high rates. However, the overall volume of imports is not dropping, as expenditures on capital investments in AI continue to grow exponentially, states the Sber expert.
For Russia, the conflict in the Middle East has, on the whole, become a disinflationary factor, Isakov notes. Its pro-inflationary influence through trade channels is minimal. In Russia’s main partner, China, annual inflation has remained low, around 1.2%. Even monthly figures have only recently emerged from deflation into slight positive growth. Given the pace of inflation growth in Russia, this effect is virtually imperceptible, assures the director of CEMI at Sberbank.
Source: Vedomosti
