Rapidan cautioned that if any chance for a ceasefire disappears and market participants start pricing in tighter supply, Brent could climb into the mid-$100s soon.
"The collapse of the US-Iran MOU has fundamentally changed our outlook," Rapidan analysts remarked in a Friday note. "The key question now is whether both sides continue to limit strikes to military targets or allow the conflict to expand to civilian infrastructure, particularly power and desalination facilities."
The Strait of Hormuz, through which roughly a fifth of the world's oil passes daily, has been a critical chokepoint in this conflict. The current disruption is among the most severe in decades, and Rapidan's projections of a slow recovery underscore how fragile global energy supply chains have become. Even a partial reopening of the strait will require extensive de-mining and repairs to damaged port infrastructure.
Rapidan does not expect shipping through the Strait of Hormuz to bounce back quickly.
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Analysts project that shipping volumes through the Strait of Hormuz will return to around 35% of their pre-war rate by October and reach approximately 65% by the end of 2027. Additionally, Rapidan now forecasts that the worldwide oil market will stay undersupplied for another year at minimum.
Weak demand from China partially counterbalances these risks. Should Brent crude stay between $90 and $100 per barrel, Rapidan predicts China will keep reducing its oil stockpiles by fewer than 500,000 barrels daily until late 2026, then resume building reserves early in 2027.
If optimism over a renewed peace agreement fades and supply keeps tightening, that buffer could vanish quickly.
China's ongoing drawdown of its crude inventories has provided a temporary cushion against even sharper price increases. However, these strategic reserves are not unlimited. If the conflict persists and Brent stays elevated, Beijing will likely need to shift from drawing down to rebuilding stockpiles, which would remove a key source of supply that has helped balance the market.
Rapidan's forecast already accounts for this transition by early 2027, but any delay in the resumption of Chinese purchases could further tighten the market. Meanwhile, the Strait of Hormuz remains a critical artery for global oil flows, and the slow recovery in transit volumes underscores the persistent risk of supply disruption.
Brent crude is already on track for more than a 30% monthly advance in July 2026. The central uncertainty is whether each side will restrict attacks to military sites or expand them to civilian targets. If strikes hit civilian power and desalination facilities, the supply disruption worsens and forecasts get revised higher.
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