Piper Sandler raised its second-half 2026 Brent crude price forecast by $10 per barrel to $90/b, citing continued constraints on Middle East oil supplies and reductions in Russian refining capacity.
The firm said the developments have tightened the global oil balance more than it expected when setting its previous forecast in July.
Piper Sandler described the forecast revision as "mostly a mark-to-market exercise," noting that Brent averaged $88/b through the third quarter. That compares with the $80/b midpoint forecast established by the firm in mid-July, when a memorandum of understanding was in place and traffic through the Strait of Hormuz was running at a higher baseline.
"Not only has Mideast supply been more constrained, but there's been zero diplomatic or military movement toward ending the conflict. The term Stalemate applies," the firm wrote.
The research also cited reduced Russian refining capacity as another factor affecting the oil market.
"Drastic cuts to refining capacity in Russia add price support," Piper Sandler said, noting that the reductions have limited an outlet for crude that would otherwise contribute to global supply.
Despite raising its forecast, the firm said its fourth-quarter estimate could still prove lower than realised prices.
"We fear that $90/b for Q4 may prove an under-estimate," Piper Sandler wrote.
Brent averaged $88/b during the third quarter, according to the firm's data, leaving its fourth-quarter forecast $2 per barrel above that level.
Piper Sandler maintains below-consensus U.S. natural gas forecasts
Piper Sandler maintained a different outlook for U.S. natural gas, reiterating fourth-quarter forecasts that are below consensus expectations.
According to the firm, U.S. natural gas inventories maintained a surplus of 150 billion cubic feet relative to five-year norms during the injection season, while prices averaged below $3/MMBtu in both the second and third quarters.
Piper Sandler attributed the supply-demand balance partly to annual production growth of between 4% and 5%, which it said has kept the U.S. natural gas market "in easy equilibrium."
The firm also added quarterly detail to its 2027 outlook, although specific quarterly forecasts were not provided in the available report.
Piper Sandler said its expectations reflect the ability of producers and infrastructure operators to expand supply in response to growing electricity consumption and liquefied natural gas exports without requiring substantially higher gas prices.
"US producers can comfortably grow production and infrastructure to meet strong domestic power-demand and LNG export scenarios at $3+ MMBtu," Piper Sandler wrote.
The firm's outlook therefore assumes that increased power demand and additional LNG export capacity can be met through higher production and infrastructure development at natural gas prices above $3/MMBtu.
Brent Oil price
Crude Oil price
