The oil market is positioning itself for a period of higher geopolitical risk and unpredictability, according to Emily Ashford, Energy Research Head at Standard Chartered Bank.
“This is evident in both the gradual push higher in flat price, adjustments in the forward curve and volatility skew,” Ashford said in a report sent to Rigzone by the Standard Chartered team this week.
“Brent crude for April delivery settled at $69.04 per barrel on 9 February, a week on week rise of $2.74 per barrel (or 4.13 percent). The forward curve has moved higher week on week,” Ashford added.
“While movement at the front of the curve is the most significant, even delivery in five years is $0.53 per barrel higher week on week,” Ashford continued.
“Call skew is very well bid, with 1m risk reversal (RR) at 18.69 on 9 February; approximately the same levels as during the initial Russian invasion of Ukraine (19.14 on 8 March 2022) , and was only recently higher in mid-June 2025 (23.01 on 17 June 2025), during the previous escalation in the U.S.-Iran-Israel conflict,” the Standard Chartered Bank Energy Research Head went on to state.
In the report, Ashford highlighted that traders and analysts were meeting in London this week for the annual International Energy Week, which the energy head said “is always a useful gauge of market sentiment”.
“Last year the focus was around the new second Trump administration, and whether it would be inherently bullish or bearish for oil prices,” Ashford noted.
“This was particularly so given the signing of a National Security Presidential Memorandum in early February 2025 that restored maximum pressure on Iran, with a focus on reducing its crude exports,” Ashford said.
“One year later, and the complex U.S.-Iran relationship and potential impact on Iranian barrels in the market remains front and center,” Ashford continued.
In the report, Ashford outlined that Standard Chartered’s “core view” on crude oil is that “market sentiment appears to be gradually turning more positive as the bearish oversupply narrative so prevalent in H2-2025 weakens, and traders turn their attention to a more positive H2-2026”.
“The supply-glut estimates of the main market commentators are likely to be revised towards seasonal norms, and demand expectations are already being adjusted higher for 2026,” Ashford added.
“We expect prices to mean revert to the low to mid $60s per barrel, with an uptick in volatility on both supply and demand risks,” Ashford said.
The Standard Chartered report projected that the ICE Brent nearby future crude oil price will average $62.00 per barrel in the first quarter of this year, $63.00 per barrel in the second quarter, $64.00 per barrel in the third quarter, $64.50 per barrel in the fourth quarter, and $63.50 per barrel overall in 2026.
In a BMI report sent to Rigzone by the Fitch Group on Friday, BMI analysts noted that Brent crude “has risen sharply over the last week as President Trump’s threats to attack Iran unless a nuclear deal is reached raised the geopolitical risk premia with the risk of military strikes potentially impacting global oil supply”.
“Brent is 9.2 percent higher for the week at $69.94 per barrel on elevated geopolitical risk. Brent prices blew through resistance levels of $66.5 per barrel and are likely to pause near … $70 per barrel barring direct military action,” the analysts added.
“Any disruption to supply would tilt fundamentals more towards a balanced view setting the stage for sustained price gains,” they continued.
The BMI analysts went on to state that physical demand for crude “remains robust with severe weather in the northern hemisphere increasing demand for heating oil and power, adding additional upside pressures to prices over the week”.
They added that they maintain their forecast for Brent to average of $67 per barrel in 2026, “down from $69 per barrel in 2025”.
To contact the author, email andreas.exarheas@rigzone.com
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