Hormuz shock reprices crude but storage constraints force a fast resolution in Oil & Companies News 05/03/2026 The US-Iran war has sharply repriced crude differentials across regions and qualities, but storage limits, elevated inventories and shifting arbitrage flows are containing the broader price response. Market & Trading calls Heavy crude differentials: Bullish as demand for heavier barrels is set to remain robust amid Middle Eastern outages, with steadily rising US crude demand, and Alberta’s spring field maintenance keeping Americas heavy sour crude markets tighter. Medium crude differentials: Bullish across regions as refiners seek alternative supplies to cover prompt requirements and anticipated restocking demand. Light crude differentials: Bullish for light crude in the EoS and WoS as the US-Israel-Iran war squeezes deliveries out of the MEG, leaving buyers to scramble for supply. Price forecast: North Sea Dated averaged $71/bbl in Feb., $4.5/bbl above our forecast, as geopolitical tensions tightened market structure. Front-month Dated traded in a narrow $69–72/bbl range before breaking higher after the US and Israel formally entered into conflict with Iran. The escalation prompted us to revise our near-term outlook upward, especially for the near-term. Our updated 12-month forecast for NSD is $66.8/bbl, up from $65.7/bbl previously. Flat prices have risen ~13% since the outbreak of war, broadly in line with our expected magnitude of reaction. The move has been relatively contained, reflecting a risk premium that had already built through Jan.–Feb., approaching $20/bbl in our model versus a normal baseline. Elevated Chinese inventories and high crude-on-water levels, particularly in Asia-Pacific, have also dampened panic buying. Our base case assumes the conflict remains contained and relatively short-lived. The US-Israel coalition military superiority, Iran’s finite missile capacity, and the strategic importance of the Strait of Hormuz for global energy flows reduce the likelihood of prolonged disruption. With the US offering military support and insurance to the maritime industry, transit will gradually normalise starting from the end of this week. Prices will see the bulk of the risk premium fade as clarity emerges that the war is nearing its end, potentially by late March or mid-April at the latest. Symbolically, the US and Israel may also be looking to end the war by Nowruz, the Iranian New Year, on 21st March. Prices should ease from current levels once tensions subside, though volatility will remain elevated through March. Seasonal refinery demand, healthy margins, and residual uncertainty around Iran’s political transition should provide a floor into Q2. OPEC+ supply hikes are unlikely to weigh materially before September due to rising domestic demand. However, we turn more bearish in H2, as higher OPEC+ output and resilient US supply, supported by producer hedging, loosen balances. Nevertheless, risks this month are skewed to the upside in the short term. A deeper escalation, such as sustained disruption in the Strait of Hormuz or direct targeting of regional energy infrastructure, could push prices above $100/bbl, with extreme scenarios reaching $150/bbl if transit remains blocked for more than four weeks. Conversely, a rapid political agreement between Washington and Tehran would likely compress the risk premium quickly, potentially driving Brent back under $60/bbl. Chart of the Month: Export coverage (days) reveals