Bank of America has raised its forecast for 2026, warning that the Iran conflict has “wiped out” the global energy surplus and created a far more fragile outlook for supply and prices.

BofA analyst Francisco Blanch said in a note to clients that the bank’s baseline “regime alteration” scenario for Iran remains the most likely, particularly after U.S. President Donald Trump suggested that Operation Epic Fury could end “very soon.”

If so, the bank expects “most energy flows could revert to normal by the month of April.”

However, BofA also cautioned that the appointment of Mojtaba Khamenei has opened the door to “hard lining,” prompting the bank to introduce three new variants in which the conflict extends into the second, third or even fourth quarter of 2026.

These paths would create very different outcomes for global supply and crude pricing.

With the Strait of Hormuz still largely shut and energy assets under attack, BofA said “hard lining 1 (where energy flows remain disrupted into 2Q26)” is now as likely as a quick resolution.

The bank now projects a 2.2 million barrels-per-day deficit in the first quarter, followed by a balanced market in the second.

Overall, BofA sees a 1.1 million b/d deficit in the first half of 2026 before volumes normalise.

As a result, BofA has lifted its Brent forecast to $77.50 per barrel for 2026, with the second quarter averaging $80, while prices fall in the second half and drop to $65 in 2027 as the pre-war surplus returns. WTI is expected to trade $5 below Brent.

The bank added that Brent could average $100 in a more severe scenario and up to $130 if disruptions stretch into late 2026.
Source: Investing.com