Kotak Investment Institutions has raised its crude oil price forecast for fiscal year 2027 to $100 per barrel. This decision was made due to prolonged supply disruptions caused by conflicts in West Asia, which have lasted for eight months and do not provide a clear outlook for a return to normalcy.
Continued Impact of Conflicts on the Oil Market
The brokerage also maintained its crude oil price forecast for fiscal year 2028 and the long term at $75 per barrel, expecting prices to decrease in the second half of fiscal year 2027 if conflicts do not escalate further and supply flows continue to improve.
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Kotak's recent report noted that this conflict has led to one of the largest oil supply disruptions in contemporary history. Despite the scale and duration of this disruption, global oil markets have shown resilience and proper management.
Rising Oil Prices and Continued Instability
Kotak stated: "While we are optimistic about normalizing and reducing oil prices, this higher price path leads us to raise our forecast for fiscal year 2027 to $100 per barrel. We maintain our forecast of $75 per barrel for fiscal year 2028."
Renewed attacks on Saudi infrastructure and tankers in the Strait of Hormuz have heightened tensions and pushed crude oil prices to their highest level in six months. Additionally, freight rates for crude oil and product tankers have reached multi-year highs.
Kotak's report indicates that Brent oil prices averaged nearly $104 per barrel in fiscal year 2027, and at the time of its price assessment, it was trading at $128 per barrel. The average Brent price has also been recorded at $126 per barrel from October to date.
Despite the recent price increases, crude oil prices are expected to decline in the second half of fiscal year 2027, provided that conflicts do not escalate further and supply flows improve.
The report also mentioned a significant improvement in oil flows through the Strait of Hormuz, although renewed attacks have created uncertainties in the energy supply outlook.
Ultimately, the prolonged disruption and recent price increases have prompted Kotak to revise its short-term forecasts, while its long-term outlook remains unchanged.
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