AMP Forecasts Oil Prices to Stay High for 8 Months of 2026

The forecast from AMP suggests oil-dependent industries will continue to face high costs, as a potential U.S.-Iran memorandum of understanding faces hurdles and skepticism from market analysts.

"Trump is always claiming a peace deal is close, but we’ve seen this movie before – we’ve seen it ad nauseam and yet, the market continues to react to it," said Matthew Sherwood, Perpetual’s head of investment strategy.

The U.S. and Iran have reportedly "largely negotiated" a deal to reopen the Strait of Hormuz, which carried one-fifth of global oil shipments before the conflict. However, President Donald Trump stated the U.S. blockade would remain in full force until a final agreement is signed, with Brent crude holding above $103 a barrel.

The standoff keeps global energy markets tight, with analysts noting full oil flows through the strait would not resume before the first quarter of 2027 even if a deal is signed now, sustaining inflationary pressures worldwide.

Deal Details Remain Murky

While President Trump has touted progress in negotiations, he also cautioned that he has instructed his team not to rush the talks, stating on Truth Social that "time is on our side." Key disagreements persist over Iran's nuclear program, the lifting of sanctions, and the release of tens of billions of dollars in frozen Iranian oil revenues.

A senior U.S. official, speaking on condition of anonymity, said Iran had agreed "in principle" to dispose of its highly enriched uranium in exchange for the U.S. lifting its naval blockade. However, Iranian sources indicated that resolving the uranium stockpile issue would require finding "feasible formulas" in future stages, suggesting a final agreement is not imminent.

Markets Cautiously Optimistic

Investors are cautiously preparing for a potential dip in oil prices that a peace deal could trigger. Australian ASX futures indicated a potential fall before Trump's announcement, and bond yields, which had surged to decade-highs on inflation fears, could see temporary relief.

Still, the skepticism voiced by analysts like Sherwood reflects broader market uncertainty. The conflict, which began on February 28, has already driven up costs for fuel, food, and fertilizer globally. In India, consumers are feeling the impact as fuel prices have been hiked after being held for 76 days, while in Australia, investors are weighing the peace-deal headlines against a broader bond sell-off.

Even with a breakthrough, the head of the Abu Dhabi National Oil Company said last week that a full resumption of oil flows through the Strait of Hormuz is not expected before early 2027, a sentiment that underpins AMP's forecast for sustained high prices.

This article is for informational purposes only and does not constitute investment advice.