Oil markets have abandoned the assumption that the war between the United States, Israel and Iran will end soon. For roughly the first three months of the conflict, the prevailing expectation was a rapid conclusion, but that view has given way to one in which the fighting could extend into next year. The practical consequence, as the report frames it, is a longer stretch of elevated prices.
The repricing shows up clearly in far-dated ICE Brent crude futures. The January 2027 contract is trading at $102.59 per barrel, while the June 2027 contract stands at $92.71 per barrel, a level the report characterizes as only slightly lower. A January 2027 price above $100 per barrel signals that traders see the war's impact on supply lasting well beyond the near term. The report also points to the December 2027 contract, suggesting the market expects elevated pricing to persist deep into 2027 rather than fade within months.
The shift in expectations came slowly. Through most of the conflict's first three months, market participants assumed the fighting would stop within days. A brief ceasefire in June appeared to support that view, and only later did traders accept that the war would not end imminently and might even run into next year.
For companies operating in the sector, the curve now points to a prolonged period of tight supply rather than a short-lived disruption. With Brent contracts for 2027 holding at elevated levels, producers, refiners and buyers face a market that prices in a conflict expected to keep supply tight into 2027, and prices high along with it.
Source: Oilprice
