Oil Price Forecast: WTI Hits $67.32 on Iran War Premium as JPMorgan Sees $60 Brent

Oil Price Forecast: WTI Surges 3.2% to $67.32 as Iran Talks Collapse, U.S. Evacuates Staff From Israel, and OPEC+ Eyes 137,000 bpd April Hike — J.P. Morgan Still Sees $60 Brent

Crude oil ripped higher on Friday with the kind of conviction that only genuine fear can produce. WTI (CL=F) jumped $2.11, or 3.2%, to $67.32 a barrel. Brent (BZ=F) advanced $2.01, or 2.8%, to $72.76. Natural gas held steady at $2.84, up 0.39%. The move came as the weekend loomed with no diplomatic breakthrough between Washington and Tehran, the U.S. authorized departure of non-essential staff from Israel, and China urged its citizens in Iran to evacuate immediately. Those are not the actions of governments expecting peace talks to succeed. Both Brent and WTI are set to close the week with a 1.4% gain despite violent intraweek swings — Brent traded in a $69.16 to $72.61 range during Thursday's Geneva session alone before closing virtually flat at $70.75. The Monday-to-Thursday arc for the April WTI contract tells the story of a market caught between hope and dread: a seven-month high of $67.28 on Monday, a reversal to $65.31 by Thursday night (down $1.17, or 1.76% on the week at that point), then Friday's explosive rally erasing the entire decline and then some.

The oil market is trading headline to headline with an $8-$10 per barrel geopolitical risk premium baked into every barrel. Strip that premium away and the fundamental picture is bearish — J.P. Morgan forecasts Brent averaging $60 for 2026, a Reuters survey of 34 analysts projects $63.85, and surplus estimates range from 0.8 million to 3.5 million barrels per day. But stripping away the geopolitical premium requires a diplomatic resolution that doesn't exist yet and may not materialize. Until Iran's nuclear standoff reaches a definitive conclusion — either a deal or a military strike — crude remains bid on fear, and nobody wants to be short heading into a weekend where the risk of waking up to $85 or $90 Brent is non-trivial.

The Geneva Talks — "Significant Progress" That Resolved Nothing

The third round of indirect U.S.-Iran nuclear talks in Geneva on Thursday was the week's pivotal event. U.S. envoys Steve Witkoff and Jared Kushner met with Iranian Foreign Minister Abbas Araqchi through Omani mediation. The tone was reported as constructive — Omani Foreign Minister Sayyid Badr Albusaidi declared "significant progress" and announced that technical-level discussions would resume next week in Vienna. Araqchi characterized the exchanges as the most serious Iran has had with the United States.

The market initially reacted with optimism. Oil prices gained more than a dollar a barrel during the session on reports suggesting momentum toward a deal. Then reality returned: the core sticking points remain completely unresolved. Washington demands that Iran halt all uranium enrichment and surrender its stockpile of 60%-enriched material. Tehran insists on its sovereign right to enrich. These aren't positions separated by a negotiable gap — they're fundamentally incompatible demands. Oil prices eased after the Omani mediator's optimistic remarks but never gave back the full risk premium, because the market correctly assessed that constructive rhetoric without substantive concessions is diplomatic theater, not progress.

President Trump's February 19th ultimatum hangs over every barrel traded: Iran must make a deal over its nuclear program within 10 to 15 days or "really bad things" will happen. That deadline window is closing. Trump reinforced the threat during his State of the Union address this week, stating he would not permit Iran — which he called the world's biggest sponsor of terrorism — to possess a nuclear weapon. The military buildup Trump ordered in the region adds credibility to the threat. The diplomatic pathway exists, but it's narrow and getting narrower.

Friday's Rally — Fear of Weekend Risk Drives WTI (CL=F) Above $67

Friday's 3.2% surge in WTI was almost entirely a positioning event. With no clear diplomatic breakthrough heading into the weekend, traders added upside protection through call buying and risk positioning against potential Saturday or Sunday developments. The evacuation orders — U.S. non-essential staff from Israel, Chinese citizens from Iran — translated geopolitical uncertainty into concrete, observable actions that contradict the optimistic rhetoric from Geneva.

The dynamic is straightforward: any military strike on Iranian nuclear infrastructure would cause an immediate price spike, potentially a massive one. Nobody holding a short position wants to ride through that risk over a weekend. Forced short-covering amplified the rally, and the absence of willing sellers above $67 WTI created a vacuum that price filled quickly. The CIBC Private Wealth desk characterized it as "a bit of a do as I do, not as I say dynamic" — governments saying they're making progress while simultaneously evacuating personnel. The market is reading actions, not words.

The $8-$10 War Premium — Quantifying the Iran Risk Inside Every Barrel

Multiple analyst desks have independently estimated the geopolitical risk premium embedded in current crude prices at between $4 and $10 per barrel. The higher end of that range — $8-$10 — reflects the specific risk of supply disruption through the Strait of Hormuz, through which approximately 20% of global oil supply transits daily. A temporary closure or disruption of Hormuz traffic wouldn't just affect Iranian barrels — it would choke supply from Saudi Arabia, Kuwait, Iraq, Qatar, and the UAE.

In mid-February, Brent traded roughly $10 per barrel above what J.P. Morgan considers fair value. That premium has oscillated with the headline cycle but hasn't dissipated. J.P. Morgan's commodities strategy team led by Natasha Kaneva doesn't expect protracted supply disruptions even if military action occurs — the expectation is that any strike would be targeted, avoiding Iran's oil production and export infrastructure. Brief, geopolitically driven crude rallies are expected to continue, but should eventually subside.

The catastrophic tail risk, however, cannot be dismissed. J.P. Morgan's own historical analysis shows that regime changes in oil-producing nations have triggered oil price increases averaging 76% from onset to peak across eight notable instances since 1979. After the Iranian Revolution, prices more than doubled and triggered a global recession. Iranian production has never recovered — it remains 2 million barrels per day below pre-revolution levels nearly five decades later. If the current standoff escalates into full destabilization of the Iranian state, the price implications would dwarf a $10 risk premium.

Oil Price Scenarios — From $55 to $150 Brent

SEB commodities analysts Bjarne Schieldrop and Ole Hvalbye outlined four distinct price scenarios this week that capture the full range of possible outcomes. On the downside, a scenario involving diplomatic resolution combined with oversupply could push Brent toward $55. On the extreme upside, a direct military conflict disrupting Strait of Hormuz transit could send Brent to $150 per barrel. The current $72.76 Brent price sits almost exactly in the middle of that range, which is what you'd expect from a market assigning real but not dominant probability to the worst-case scenario.

J.P. Morgan's $60 Brent Forecast — The Bearish Fundamental Case

Strip away the geopolitics and the supply-demand picture is decisively bearish. J.P. Morgan Global Research forecasts Brent averaging approximately $60 per barrel through 2026. The thesis is built on simple math: world oil demand is projected to grow by 0.9 million barrels per day, but global supply growth will outpace that figure. Surplus was already visible in January data and is expected to persist, requiring voluntary and involuntary production cuts to prevent excessive inventory accumulation.

The Reuters survey of 34 economists and analysts, conducted in February, projects Brent at $63.85 for 2026 — up from January's forecast of $62.02 — and WTI at $60.38, up from $58.72. Year-to-date, both benchmarks have traded above those averages: Brent at $70.48 and WTI at $65.01. The gap between current spot prices ($72.76 Brent, $67.32 WTI) and the consensus forecasts ($63.85 and $60.38) quantifies the market's geopolitical premium at roughly $7-$9 per barrel — almost perfectly aligned with the $8-$10 estimate from risk analysts.

For context: in February 2025, analysts expected Brent and WTI to average $74.63 and $70.66 for that year. Actual prices came in at $68.19 and $64.73 — forecasters were too bullish by about $6 per barrel. If the same pattern holds in 2026, the consensus $63.85 Brent call could end up closer to $58, which would validate J.P. Morgan's more bearish $60 target.

OPEC+ Eyes 137,000 bpd April Output Hike — The March 1st Decision

OPEC+ is likely to approve an increase of 137,000 barrels per day for April at its March 1st meeting, according to three sources with knowledge of the group's deliberations. The increase would end a three-month pause in production hikes that covered the first quarter and comes as the cartel prepares for peak summer demand. Eight OPEC+ producers are scheduled to meet Sunday.

The timing is significant. If the geopolitical risk premium remains elevated when the decision is announced, it may embolden the group to resume output hikes — the war premium provides cover for adding barrels without crashing the price. But the fundamental risk is clear: any increase into what is already projected as a surplus market adds to the overhang that will weigh on prices once geopolitical fears fade. The surplus estimates of 0.8 million to 3.5 million barrels per day already incorporate cautious OPEC+ output assumptions. If the group accelerates unwinding its voluntary cuts, the supply glut deepens.

Saudi Arabia Boosting Output in Anticipation of U.S. Action on Iran

Riyadh has begun proactively increasing oil output — a signal that Saudi Arabia is preparing for the possibility that Iranian barrels are temporarily removed from the market through either military disruption or tighter sanctions enforcement. The UAE is simultaneously boosting Murban crude exports ahead of the March 1st OPEC+ decision. These aren't speculative moves — they're sovereign producers positioning supply to fill a gap they see forming. When Saudi Arabia and the UAE quietly ramp production, the market should pay attention to what they believe is coming

The U.S. Inventory Bomb — 16 Million Barrels Added in a Single Week

Beneath the geopolitical fireworks, the U.S. supply picture delivered a staggering data point: crude oil stockpiles jumped 16 million barrels in a single week. That's the kind of build that would normally send WTI careening toward the low $60s. Instead, the market absorbed it with barely a flinch because the geopolitical narrative is overwhelming fundamental signals. But the inventory data doesn't lie. It confirms the surplus J.P. Morgan identified in January is not theoretical — it's accumulating in physical storage right now. If and when the Iran premium deflates, these barrels will exert gravity on price.

Russian Sanctions and Global Trade Flow Reshuffling

Nearly 70% of Russian crude is now subject to U.S. sanctions following the latest enforcement round. The practical effect is a massive reshuffling of trade flows rather than a genuine supply reduction. India has scaled back Russian oil intake by 600,000-800,000 barrels per day following President Trump's announcement of lower U.S. tariffs on Indian goods — a carrot contingent on India reducing Russian imports. Those barrels are being redirected primarily to China, where Russian crude imports have risen by 500,000 bpd as independent refiners and storage facilities absorb the discounted supply.

J.P. Morgan expects India to maintain Russian imports at 0.8 to 1.0 million bpd despite the pressure. Russian Urals crude remains attractively priced versus alternatives from the U.S. or Middle East, and Indian refiners are increasingly sourcing through non-sanctioned intermediaries. Venezuelan oil has returned to India following the easing of U.S. sanctions on Caracas, but volumes can't fully replace Russian crude. The bottom line: Russian barrels remain exportable, but only at increasingly steep discounts and with higher logistical complexity. The sanctions reinforce an existing trend rather than creating a genuine supply shock.

Russia and Iran Slash Prices to Compete for Chinese Market Share

Both Moscow and Tehran are aggressively discounting crude to secure Chinese buyers — a price war among sanctioned producers for the world's largest importer. This dynamic puts a ceiling on how high global benchmarks can rise from fundamental demand alone, because discounted barrels flowing to China displace full-price barrels from the Middle East and West Africa. The discount war benefits Chinese refiners and, by extension, Chinese economic growth — but it also means the effective global supply pool is larger than headline OPEC+ quotas suggest.

Demand Growth — 0.5 to 1.1 Million bpd, But Headwinds Are Building

Most analysts project oil demand growth of between 0.5 and 1.1 million barrels per day for 2026. The range is wide because the macro outlook is genuinely uncertain. Elevated tariffs — Trump's 15% global rate — threaten to slow global trade and industrial activity. EV adoption continues accelerating, structurally displacing gasoline demand in developed markets. China's economy is growing but not at the pace that drove the 2021-2023 oil demand surge.

China's strategic stockpiling has masked weaker organic demand. Beijing has been adding approximately 1 million barrels per day to its strategic reserves, effectively removing surplus barrels from the market. If that pace slows — and there are signs it may as storage capacity fills — the oversupply becomes immediately visible in global inventories. The risk is that China simultaneously slows its stockpiling and the geopolitical premium fades, creating a double hit to prices that could push WTI well below $60.

U.S. oil production, meanwhile, is expected to either plateau or slightly decline in 2026. The shale boom's best days are behind it, drilling activity is moderating, and producers are prioritizing capital discipline and shareholder returns over growth. This provides a partial offset to OPEC+ output increases, but not enough to prevent a surplus if demand disappoints.

Venezuela — The Wild Card Sitting on the World's Largest Reserves

Caracas suspended 19 oil production contracts this week, injecting fresh uncertainty into an already volatile supply picture. Venezuela holds the world's largest proven oil reserves, and J.P. Morgan has flagged the evolving situation there as a considerable upside risk to global supply. If the political situation stabilizes and investment returns, Venezuelan production could ramp significantly — adding to the surplus that's already pressuring prices. Conversely, further deterioration could remove existing barrels from the market at precisely the wrong time.

Global Debt and the Macro Backdrop — $348 Trillion and Counting

The Institute of International Finance reported this week that global debt reached a record $348 trillion at the end of 2025, after $29 trillion was added over the year in the fastest annual accumulation since the pandemic. U.S. government debt stands at 122.8% of GDP. China's corporate debt has reached 138.1% of GDP. The AI investment boom and European defense spending are the primary drivers — neither of which is sustainable at current trajectories without either continued low interest rates or higher economic growth.

For oil, the debt overhang matters because it constrains fiscal and monetary policy flexibility. Governments drowning in debt are less able to stimulate growth through spending, and central banks face competing pressures between fighting inflation and keeping borrowing costs manageable. The Fed's decision to hold rates at 3.50%-3.75% while January PPI came in at 0.8% core reflects this tension. Emerging markets face record refinancing needs exceeding $9 trillion in 2026. A synchronized global slowdown triggered by debt service burdens would crush oil demand and send prices toward J.P. Morgan's $60 forecast — or lower.

The Verdict — Crude Oil Is a Short-Term Hold, Medium-Term Sell Below $70 WTI

The oil market is being driven by two forces operating on completely different timescales, and the positioning decision depends entirely on which horizon matters most.

The near-term is bullish by default. Nobody rational sells crude into a weekend where military action against Iran is a genuine possibility. The $8-$10 per barrel risk premium is earned — the Strait of Hormuz transit risk, the evacuation orders, the closing window on Trump's 15-day ultimatum, and the absence of any substantive diplomatic concession all justify maintaining long exposure or at minimum staying flat. SEB's $150 Brent scenario is low-probability but non-zero, and the asymmetry of that tail risk means the short side is suicidal until the Iran situation resolves.

The medium-term, however, is unambiguously bearish. J.P. Morgan's $60 Brent target, the Reuters consensus at $63.85, surplus estimates of 0.8-3.5 million bpd, the 16 million barrel U.S. inventory build, OPEC+'s 137,000 bpd April hike, China's potential stockpiling slowdown, U.S. production plateauing, and EV displacement of gasoline demand all point to prices gravitating lower once the geopolitical premium deflates. The February 2025 precedent — where analysts overestimated annual prices by $6/barrel — suggests even the current consensus is too optimistic.

Hold existing long positions through the weekend with tight stops below $64.50 WTI. If the Vienna technical talks next week produce genuinely substantive progress — meaning Iran agrees to enrichment limitations, not just more talks about talks — begin scaling out of long positions above $67 WTI, targeting a full exit above $70. If military action occurs, sell into the spike above $75 WTI; the initial fear premium historically reverses within days unless physical supply is actually destroyed. For medium-term positioning, sell crude on any rally above $70 WTI that isn't accompanied by confirmed, sustained disruption to Hormuz transit. The fundamental surplus will reassert itself — the only question is whether it takes two weeks or two months. J.P. Morgan's $60 Brent by year-end is the highest-probability outcome once the Iran fog clears.

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