ANZ Raises Year-End Brent Forecast to $105 From $95, Says Physical Supply Stays Tight

Brent has traded well above $100 in recent weeks, tanker attacks around the Strait of Hormuz keep piling up, and ANZ has now marked its year-end forecast to match. The bank raised its Dec. 31 Brent call to $105 a barrel from $95.

ANZ's reasoning is that physical constraints in the oil market are unlikely to dissipate before the end of the year. That is a statement about barrels that can actually be delivered, not about futures positioning.

The scenarios

ANZ laid out a wide band around its base case. A material escalation in the Iran conflict could push Brent to $120 a barrel or higher. A credible diplomatic breakthrough combined with a material improvement in shipping could bring it back toward $90 to $95.

The downside case has two conditions, not one. A peace deal on paper would not be enough if ships still can't move freely.

ANZ said transit through the Strait of Hormuz is running at roughly 60% of normal levels. That makes it harder to get producers' spare capacity to market. ANZ Research also found Gulf crude exports fell for a fourth straight week and global distillate inventories sit nearly 5% below their five-year average.

Where prices have been

Recent quotes show a volatile range. CNN reported Brent trading above $111 a barrel earlier in the month. Reuters, via Hindustan Times, quoted Brent at $116.26 on a Tuesday session after it surged above $117 the previous week, the highest since April. Fox News, citing Reuters, reported Brent at $106.06 on Wednesday, up 37 cents.

The spike followed a wave of Iranian attacks on tankers near Hormuz. A Washington-based think tank that has tracked ship security incidents since 2017 says October has had the highest number of attacks on commercial vessels in and around the strait.

Saudi Arabia is also under fire. Yemen's Houthis vowed Wednesday to keep attacking Saudi airports and oil facilities. Sources told Reuters a missile strike damaged a building at Saudi Aramco's headquarters in Dhahran. The Saudi-led coalition said Thursday it destroyed an incoming drone aimed at the Eastern Province. Riyadh also called off its flagship Future Investment Initiative conference a week before it was due to open.

Not everyone sees collapse

The picture is not uniformly dire. Kpler data showed the seven-day average of oil flows out of the Middle East, across Hormuz, the Red Sea and the Gulf of Oman, at just over 24 million barrels a day. That is above the pre-war average. A restored Saudi pipeline export route has helped keep a lid on prices.

IEA Executive Director Fatih Birol still warned against reading comfort into crude prices. "I don't see any credible pathway that 2027 will be a year of normalisation," he told the Financial Times Energy Transition Summit in London. He called a focus on crude alone "myopic" because consumers buy products. Diesel prices have roughly doubled from pre-war levels, he said, partly because of attacks on Russian refineries. Diesel demand typically rises into the winter season while many large refineries have maintenance planned.

Market commentary from Newsquawk argues that year-end target revisions usually trail the market. Banks tend to mark forecasts to where prompt prices and the forward curve have already gone, it said, so the change confirms a repricing rather than adding fresh information. Newsquawk said what to watch is whether peer banks follow and whether prompt timespreads corroborate the call.

Governments are drawing down stocks

European governments are already managing supply. France's finance minister said Europe will release 42 million barrels of oil over the next three months. A French official said France is cutting diesel stock requirements to free up supply. The Netherlands released its final 700,000 barrels of oil products to the market.

Shipping schedules show North Sea crude supply underpinning the Brent benchmark falling to 475,000 barrels a day in December, down from 514,000 in November.

QatarEnergy's CEO said Qatar is buying U.S. LNG and talking to other suppliers about trading and arbitrage hedges against future disruption to shipping through Hormuz, according to reports.

The political clock

ANZ named the U.S. midterm elections on Nov. 3 as the next major geopolitical catalyst for oil. The bank said the prospect of renewed hostilities afterward adds uncertainty to an already fragile physical market.

President Donald Trump spoke Wednesday at a rally in Arizona about a past planned strike on Iran. He said a leak about B-2 departure and arrival times forced him to call off a raid, and that "leakers should be shot." The Iran conflict is stalemated. Iran has publicly signaled it is preparing for another round of war, according to CNN.

ANZ's $120 scenario hangs on whether renewed hostilities follow the Nov. 3 vote.