BY SRH
- Decision Week: Simplified Approach Versus Challenging Method, ValuedWhat is the value of each path? BofA’s commodities division elevated its 2H26 Brent baseline to $95 (up from $83) in Friday’s Oil Gusher (accessible to professional subscribers), anticipating that “conflicts are expected to persist until the year’s conclusion. Its scenario tree aligns seamlessly with Trump’s dichotomy:
Agreement / reverting to the MoU (“less probable”): volumes exceeding 10mb/d recommence; Brent averages $83 in the second half of 2026 and $75 in 2027.
Hostilities persist (baseline): sporadic deliveries of 5mb/d; Brent averages $95 in the second half of 2026 and $80 in 2027.
Return to fierce competition (“improbable”): Brent reaches $120 in both the second half of 2026 and 2027.
Conflict impacts energy resources (tail risk): Brent crude averages $150 in the second half of 2026 and exceeds $150 in 2027, while ICE gasoil reaches $300.
Brent at around $103 is pricing something between “skirmishes” and “combat,” which is about where the Camp David attendees appear to be. Here’s what to watch this week:
- Trump’s “decision.” The president has now said “you’ll see” at least three times in five days. The Camp David readout, or the lack of one, is the main event.
- Tehran’s reply. Baghaei says “additional points” still have to go back to Washington through Qatar. Watch for any movement on sequencing, which is the real sticking point.
- Yemen. The Houthis are advancing on the last road between Taiz and Aden. Any confirmed damage at Riyadh or Khurais, or a stalled Saudi push near Bab el-Mandeb, puts Goldman’s “below 50% inside a few days” scenario in play.
- The southern Omani route. At least four tanker strikes since Thursday. If UKMTO keeps reporting at this pace, the “dark export” recovery in Goldman’s chart above will be tested.
- Tehran’s home front. With an acting oil minister, a rial at 2.7 million and inflation near 90%, the next rial print matters as much as the next tanker report.
- Macro crosswinds. FOMC minutes (Wednesday), 10- and 30-year Treasury auctions, and China’s return from Golden Week on Thursday with October fuel exports suspended. In a market where Goldman says oil is “tracking rates far more tightly than usual,” these matter for crude too.
Bloomberg’s best summary of the standoff came from the Chatham House associate fellow Aniseh Bassiri Tabrizi: “Both sides generally want an agreement, but they are moving further apart rather than closer.” Iran’s leverage over Hormuz is fading, its currency is in freefall and its oil minister just walked out the door. That is exactly what makes the “easy way” more likely, and the “hard way” more dangerous. Tehran’s hardliners, as one former US intelligence official told Bloomberg, “are betting that they can absorb more domestic pain and wait out US engagement in the region.”
Meanwhile, the oil market, which entered this war with full tanks and ample spare capacity, now has neither. Goldman’s desk puts the risk premium at $20-25/bbl, and the macro crowd is positioned for it to shrink. If Trump picks door number two, that premium will look cheap. We’ll know soon enough. After all, we’ve been told by the president, “you’ll see.”
