BofA Warns: Persistent Supply Tightening Could Push Oil Prices Above $150
nashnova research
Bank of America raised its year-end Brent target from $83 to $95 a barrel and warned that if the Strait of Hormuz disruption persists into spring 2027, prices could spike above $150 — the level needed to force global demand destruction.
What exactly did BofA upgrade?
BofA lifted its year-end Brent forecast from $83 to $95 a barrel — a roughly 14% increase.
It kept its 2027 average Brent call at about $80, but flagged clear upside risk.
This means → BofA's base case is still "containable," but the bank now considers a loss-of-control scenario too probable to ignore.
What is happening at the Strait of Hormuz?
Since the U.S.–Israel strikes on Iran, crude disruptions through Hormuz have fallen from roughly 14 million barrels per day to a recent range of 4–8 million bpd.
The strait still handles about one-third of global seaborne crude trade, and passage remains severely restricted.
In plain terms = the worst moment has passed, but millions of barrels a day are still stuck — the gap is far from closed.
What happened on the Saudi side?
Saudi energy infrastructure was hit by Houthi strikes backed by Iran, forcing partial shutdowns.
Reuters reported that Saudi Aramco is restoring its East–West pipeline and may restart shipments from the Red Sea port of Yanbu as early as the same day.
That news pushed Brent and WTI below the $100 and $90 marks respectively.
This reflects how sensitive the market is to Saudi recovery signals — any hint of repair immediately drags prices lower.
Where does the $150 figure come from?
BofA strategists stated explicitly: if disruptions last into spring 2027 or infrastructure damage worsens, the Brent front-month contract may need to surge above $150 a barrel.
This means → $150 is not a "forecast." It is a demand-destruction price — the level at which oil becomes expensive enough to force consumers and businesses worldwide to cut back.
Put simply = BofA is saying: if the supply side cannot be repaired, the only way to balance the market is for prices to rise until people can no longer afford to buy.
Why won't demand shrink on its own in the near term?
BofA noted that, adjusted for inflation and income, energy prices remain in a relatively affordable range.
Economic growth shows no signs of slowing, so demand will not contract spontaneously in the short term.
This means → two checkpoints will decide the outcome: ① whether Hormuz passage can meaningfully recover before spring 2027, and ② whether Saudi infrastructure damage widens further. The answers determine which end of the price range materialises.
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