Supply disruptions and slowing demand create a consensus of a "100-dollar ceiling" in the oil market.

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The U.S.-Iran war has already been raging for more than three months, and a subtle price equilibrium is forming in the oil market: supply has been heavily disrupted, but demand shrinking in tandem will serve as a "natural shock absorber." Brent crude oil prices are expected to remain locked around $100.

According to a Bloomberg report on Thursday, a survey of 126 asset managers and energy market professionals this month showed that most respondents expect the average Brent crude price to fall within the range of $81 to $100 per barrel over the next twelve months. Nearly two-thirds of respondents believe that geopolitical risk premiums will persist for the coming years, in the range of $5 to $15 per barrel, and only a handful of respondents expect the premium to exceed $20.

This consensus is forming in the following context: The U.S.-Iran war has entered its twelfth week, the Strait of Hormuz is facing severe transit restrictions, and global energy prices and inflation are under upward pressure. However, despite clear signs of a tightening in physical supply, oil prices have remained relatively moderate overall, and market sentiment has shifted from chasing upside potential to managing volatility risk.

Demand destruction becomes the primary market rebalancing mechanism

The survey shows that "demand destruction" is considered the most likely mechanism to offset the supply gap over the coming year, followed by trade flow restructuring, OPEC+ policy adjustments, and the release of strategic reserves.

Bloomberg Intelligence analysts Salih Yilmaz and Will Hares point out that the above results show that geopolitical risks are seen as a persistent factor, but not a fundamental reset for the long-term price system. Respondents seem to generally believe that supply and demand will gradually rebalance, anchoring prices within a relatively stable range.

Regarding forecasts about the scale of supply disruption, most respondents estimate the global daily supply disruption at between 3 and 7 million barrels, with very few expecting it to exceed 10 million barrels. This assessment echoes market confidence in the demand side's automatic adjustment ability—high oil prices themselves will dampen consumption, thereby partially closing the supply-demand gap without external intervention.

Market sentiment turns conservative, bullish bets fall to pre-conflict lows

Despite the real pressures on the supply side, trading sentiment in the oil market has clearly become more cautious.

The call skew for West Texas Intermediate (WTI) and Brent crude oil—that is, the option premium traders pay to bet on further price rises—has narrowed to its lowest level since just before the conflict broke out at the end of February this year. Hedge funds' bullish positions have also fallen back to lows from the same period.

About a quarter of respondents expect an increase in hedging and risk management activity, while only 15% expect the market to have more opportunistic risk-taking. This comparison suggests that professional investors are now inclined toward defensive positioning rather than actively betting on higher oil prices.

Limited room for U.S. shale oil output increase, unable to substantially rebalance market

U.S. shale oil is seen as a potential supplementary supply source, but the market is generally skeptical about its rebalancing capability.

Most respondents expect U.S. shale oil production to experience modest growth in the coming years, with nearly one-third expecting output to remain essentially flat; few respondents expect either a significant surge or substantial decline.

Some shale producers have begun to slightly ramp up drilling activity as oil prices hover near a four-year high, and Washington is also urging domestic firms to boost output. The U.S. Energy Information Administration (EIA) forecasts that domestic crude output will climb to a record 14.1 million barrels per day by 2027. However, respondents widely believe that this incremental increase is not enough to fundamentally change the supply-demand balance, and the marginal contribution of shale oil will be offset by the ongoing geopolitical risk premium.

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