Oil prices are expected to stay higher for longer as disruption in the Middle East continues, according to S&P, which has raised its price assumptions for crude for the rest of this year and next despite this week's sharp sell-off.

The new assumptions

S&P raised its Brent crude oil price assumption for the remainder of 2026 by $10 a barrel to $105 per barrel. It also increased its assumption for 2027 by $5 to $85 a barrel, reflecting what it called continued elevated geopolitical risks, the need for inventory rebuilding and residual market tightness as Persian Gulf oil flows normalise.

The agency said it was increasing its oil and gas price assumptions to reflect the continued war in the Middle East disrupting oil and product exports. It also raised its estimates for European benchmark natural gas prices.

Disruption through 2027

S&P's revised base case assumes disruptions in the Strait of Hormuz will continue throughout 2027, although crude oil volumes coming out of the strait will remain well above the lows reached in May 2026. A fifth of global oil and liquefied natural gas previously passed through the strait, which was effectively blocked by Iran earlier this year.

A week of whiplash

The upgrade came at the end of a volatile week for crude. Brent settled on Friday at $98.32 a barrel, down 13.32% on the week, after traders bet that the US midterm results would push President Donald Trump towards a diplomatic end to the war on Iran. Prices had recovered from Thursday's lows after fresh attacks on oil tankers in the Gulf renewed worries about supply flows through the region, with shipping through the strait still running well below normal capacity.