-- Global oil and natural gas price forecasts have been sharply revised higher following the latest escalation in the Middle East, with RBC Capital Markets citing an "enormous oil supply shock" and no clear path to de-escalation.
In a research report published on Wednesday, the bank said that it now sees Brent crude averaging $90.99 per barrel in 2026, up 51.3% from its prior estimates, with the West Texas Intermediate expected at $83.63 per barrel, a 49.3% upward revision.
Similarly, RBC raised its natural gas outlook, with Henry Hub prices seen at $4.07 per Metric Million British Thermal Unit, up 7%. In contrast, European gas prices are expected to more than double, with the UK NBP forecasts at $16.51 per MMBtu.
The report said that expectations of normalization in European gas prices had been "upended," as Asian buyers seek out alternative supplies, competing directly with buyers within the bloc.
Globally, around one-fifth of LNG supply has been taken offline due to the Iran conflict. However, RBC noted that increased capacity additions and weaker Chinese demand could partially cushion the shock.
The bank's analysts also moved their natural gas liquids forecast higher, attributing it to replacement demand for propane and butane, flows of which have been disrupted during the ongoing Strait of Hormuz crisis.