Piper Sandler Lifts Brent Forecast to $90, Warns It May Be Too Low

Piper Sandler has increased its price forecast for Brent crude oil for the second half of 2026 by $10 per barrel to $90, citing a global supply-demand balance that has become tighter than anticipated. The firm warned that even this revised forecast could prove to be too conservative amid persistent geopolitical risks.

Tighter Supply Spurs Forecast Upgrade

The revision is driven by two main factors, according to a note from the investment bank. First is a deepening supply "stalemate" in the Middle East, with no clear diplomatic or military resolution on the horizon. Second, Piper Sandler pointed to significant cuts in Russian refining capacity, which has reduced an outlet for crude that could have otherwise pressured global benchmarks.

The firm described the adjustment as largely a "mark-to-market" revision. It noted that Brent crude has already averaged $88 per barrel in the third quarter, significantly exceeding the firm's previous mid-point forecast of $80 from mid-July. This higher price environment is expected to directly boost cash generation and shareholder returns for integrated oil majors and exploration and production (E&P) companies.

Upside Risks Remain

In a notable admission, Piper Sandler stated that it worries its new $90 per barrel forecast for the fourth quarter "may prove to be an underestimate." Such a warning of immediate upside risk is uncommon for a research firm that has just issued an upgrade.

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The narrow gap between the Q3 average of $88 and the Q4 forecast of $90 leaves little room for further supply shocks. The bank highlighted that any new supply disruptions in the Strait of Hormuz or another wave of Ukrainian attacks on Russian refining infrastructure could push the benchmark price above its newly set target.

Contrasting View on Natural Gas

In contrast to its bullish oil outlook, Piper Sandler holds a more cautious, below-consensus view on U.S. natural gas. The firm attributes this to stable annual production growth of 4% to 5%, which it believes allows the U.S. to "comfortably maintain a supply/demand balance."

Piper Sandler argued that U.S. producers can profitably expand output to meet demand from both domestic power and LNG exports at prices around $3/MMBtu. This structural view suggests that a significant price spike is not necessary to incentivize the supply needed to meet rising demand from factors like AI data centers and LNG export capacity growth.