JPMorgan analysts estimate that the current war premium adds roughly $20 to the price of Brent crude, placing its fair value at $94 per barrel compared to the market price of $114. The bank notes that historical deviations exceeding 5% above fair value typically persist for an average of 3.8 months.
BMI, a unit of Fitch Solutions, forecasts that a preliminary deal regarding the Strait of Hormuz could trigger a significant sell-off in oil prices. The firm anticipates such an agreement is most likely to occur in early 2027, potentially driving Brent crude prices down to an average of $67 by the fourth quarter of that year.
Current market data from JPMorgan shows that crude oil delivered to Asia averaged $131 per barrel in October. The bank attributes the price gap between regions to a tanker shortage, with implied transport costs reaching $38 per barrel for Asia, compared to $13 per barrel for Europe.
US Energy Secretary Chris Wright stated that current price spikes are temporary and linked to a global refining shortage. BMI analysts suggest that refined fuel prices will likely recover more slowly than crude oil even if a deal is reached, though they warn that renewed high-intensity fighting could push prices above previous peaks.
