Global energy markets are grappling with intense volatility, prompting a revision to short-term price forecasts even as expectations for a steady long-term outlook remain, RBC Capital Markets strategists said Wednesday.
RBC analysts described the current environment as the "new abnormal," as markets react to heightened geopolitical conflict in the Middle East and its impact on strategic maritime trade routes.
Despite recent flare-ups in the Middle East and concerns over tanker traffic in the Strait of Hormuz, RBC trimmed its 2026 and 2027 forecasts for West Texas Intermediate crude by about $8 per barrel and $5/bbl, respectively.
However, analysts held long-term equilibrium price expectations steady, maintaining targets of $80/bbl for Brent and $75/bbl for WTI, citing persistent structural risks and uncertainty over the resolution of regional conflicts.
Natural gas markets in North America are also grappling with the effects of robust domestic supply and unseasonably mild weather.
RBC slashed its Henry Hub outlook to $3.58 per million British thermal units for 2026 and $3.50/MMBtu for 2027, though its long-term forecast remains anchored at $4/mmBtu.
Canada's AECO benchmark is forecasted to trade at CA$1.81/mcf ($1.28/mcf) in 2026, as the price-uplifting effects of the LNG Canada project remain more muted than previously anticipated.
Meanwhile, in Europe, the focus remains on inventory replenishment. With gas storage levels currently at 50%, about 10 percentage points below the same period last year, RBC analysts expect the continent to maintain a firm bid for liquefied natural gas throughout the summer months to reach a target of 80% capacity by winter.
Consequently, RBC lowered its NBP natural gas forecasts to $14.3/MMBtu for 2026 and $11.4/MMBtu for 2027.
Global LNG markets are demonstrating greater resilience than in 2022, largely due to new capacity coming online that provides "insulation" against price shocks.
RBC analysts said that, though Qatar's Q2 exports fell by 18 million metric tons over the year amid regional disruptions, global volume losses were limited to 5 million mt, offset by output growth from other regions, including LNG Canada and the Golden Pass project.
Analysts said that while sustained growth is projected through H2 2026, the speed of Qatar's export recovery and the trajectory of Chinese demand remain the primary variables for the global balance.
Elsewhere, RBC said that the Western Canadian Select-WTI differential remains largely unchanged, while natural gas liquids price forecasts have been adjusted downward, reflecting both lower crude and gas outlooks and high current inventories of propane and butane.