Kpler raised its 12-month North Sea Dated forecast to $81 per barrel from $73/bbl as Middle East supply disruptions tighten the market, while weak Chinese demand caps the upside, it said in a Monday note.
The prolonged US-Iran confrontation has changed Kpler's market outlook for the rest of 2026, with the firm now treating the conflict as an operating condition through at least year-end rather than a short-lived price shock.
Kpler's base case assumes a year-end resolution that would gradually restore flows through the Strait of Hormuz and Bab el-Mandeb after Iran makes significant nuclear concessions during Q4, while its upside and downside cases reflect renewed escalation or a rapid reopening of both chokepoints.
The partial closure of the Strait of Hormuz has prompted Kpler to reduce its Middle Eastern production estimates, turning its H2 2026 balance from a projected 1.5 million b/d surplus into a deficit of nearly 2 million b/d.
Despite the tighter physical market, North Sea Dated averaged $82.1/bbl in July, down from $85.3/bbl in June, while Brent briefly approached $100/bbl as traders continued to respond strongly to ceasefire and negotiation headlines, Kpler said.
China is limiting the potential for a broader crude rally, as weak domestic demand, compressed refining margins and high inventories have reduced refinery buying, with Chinese crude intake estimated at 12.5 million to 12.6 million b/d in June and July.
That intake represents an 18% decline from a year earlier, or a shortfall of 2.8 million b/d, while Kpler expects Chinese inventories to need another six months to return to March 2025 levels at current import rates.
Refining margins are supporting crude demand as constrained Middle Eastern product exports and the 400,000 b/d Jizan refinery shutdown tighten global product markets, according to the note.
US crude exports fell 1.9 million b/d from their May peak in July as Middle Eastern flows recovered and domestic balances tightened, while Hormuz transit averaged 3.9 million b/d from mid-July, compared with a low of 195,000 b/d in March.
US crude inventories also constrained export economics, with Cushing stocks at 19.4 million barrels and total US crude stocks falling to 712 million barrels in July from 791 million barrels in May, Kpler said.
Light crude differentials rose about $5/bbl to $6/bbl since mid-July as repeated CPC terminal outages disrupted loadings, while vessel attacks further tightened Mediterranean supply, Kpler said.
Medium sour grades strengthened as Dubai's M1-M3 spread reached $10.8/bbl on July 24, while Arab Light's September OSP could rise $4/bbl to $5/bbl from August levels.
Urals also gained, rallying to $1 to $2/bbl below Dated Brent delivered in India from about $12.5/bbl below Dated Brent in early July, while Saudi crude faced logistical pressure from tanker diversions around the Cape.
Heavy crude showed mixed pricing, with Sudanese Dar Blend differentials gaining more than $10/bbl in two weeks to $3/bbl versus North Sea Dated, while high-TAN DAP Zhejiang fell to about -$7/bbl before recovering to -$4.8/bbl, Kpler said.
Kpler said three factors will determine whether its $81/bbl forecast proves conservative: the recovery of CPC loadings, whether Hormuz transit remains near 3.9 million b/d and, most importantly, whether Chinese refiners return to the market.