Oil Price Forecast: Supply Risks from Strait of Hormuz Support Bullish Outlook
Published: March 17, 2026
Oil prices have seen a rebound as supply concerns escalate due to disruptions in the Strait of Hormuz, which is significantly impacted by the ongoing conflict involving the United States, Israel, and Iran. Despite attempts to stabilize the market through strategic reserve releases, the volatility in oil prices is expected to continue.
Market Response to Supply Concerns
On Tuesday, oil prices rose sharply, with Brent crude increasing by over 2% to $102.90 per barrel and WTI crude rising by 1.40% to approximately $95.65. This uptick follows a previous session where Brent experienced a 2.8% drop and WTI fell by 5.3%. The primary driver of this volatility is the disruption in the Strait of Hormuz, a critical energy route that accounts for 20% of the world's oil and liquefied natural gas shipments.
Impact of the Strait of Hormuz Crisis
The ongoing conflict has led to significant traffic disruptions in the Strait of Hormuz, prompting the United Arab Emirates to cut oil production by more than half due to export challenges. This situation has raised fears of supply shortages, contributing to the recent price increases.
Strategic Reserve Releases
In an effort to mitigate the impact of these supply shocks, governments and international energy agencies have agreed to release 400 million barrels from strategic reserves. However, this measure may not be sufficient to balance the supply gap, which is estimated to be between 5 and 8 million barrels per day due to the disruptions. Consequently, banks have adjusted their long-term price forecasts, with Bank of America raising its 2026 Brent projection to $77.50 and Standard Chartered to $85.50.
Technical Analysis and Price Outlook
From a technical standpoint, WTI crude oil has shown strong bullish price action, consolidating between $68 and $62 before breaking out. The breakout at $68 has propelled prices towards the $120 region. Although the Relative Strength Index (RSI) indicates overbought conditions, this short-term correction is viewed as a buying opportunity for future price increases.
Brent crude also exhibits bullish behavior, having broken out of a descending broadening wedge pattern. The price has established $81 as a support level during the ongoing crisis.
Conclusion
The oil market remains highly sensitive to geopolitical developments in the Middle East. The disruptions in the Strait of Hormuz have resulted in one of the most significant supply shocks in recent years, pushing Brent crude prices above $100 per barrel. While strategic reserve releases have provided some temporary relief, they cannot replace normal trade flows. As long as the conflict persists and the Strait remains unstable, oil prices are likely to experience continued volatility, posing further risks to global inflation.