Black in gold: Brent crude oil price is forecast at $100-120 per barrel
The new escalation of the conflict in the Middle East provoked a sharp increase in oil prices — they have increased by 27% since July 6. On July 20, the price of Brent at some point exceeded $91.4 per barrel - the market puts the risk of disruptions in the supply of raw materials in prices. Experts differ in their forecasts: some believe that quotes are unlikely to exceed $ 100 per barrel, while others allow an increase to $ 120. Any of these scenarios will benefit the Russian budget, which will receive additional oil and gas revenues. What factors will influence the situation in the near future can be found in the Izvestia article.
Why has oil gone up again?
The price of Brent crude oil at auction on July 20 rose above $ 91 per barrel for the first time since the first decade of June. It last traded at this level on June 10-11, after which it declined to $71.5 during the month. In the two weeks since July 6, the price of Brent has increased by 27%.
Oil prices are rising amid a new round of conflict between the United States and Iran. On July 12, Tehran announced the closure of the Strait of Hormuz. Last weekend, the Islamic Revolutionary Guard Corps (IRGC) reported the bombing of two oil tankers that were trying to cross the Strait along a mined route, as well as missile and drone strikes on four more vessels. The IRGC stated that transit through the strait will remain impossible until "the American aggression stops."
On July 20, the Central Command of the US Armed Forces (CENTCOM) announced the completion of the ninth consecutive night series of strikes on Iran. At the same time, US Secretary of State Marco Rubio said that Washington remains open to a diplomatic settlement. In turn, Iranian Foreign Minister Abbas Araqchi said that Tehran is ready to start negotiations only after gaining "advantage on the battlefield." On the same day, the Yemeni Ansar Allah movement (Houthis) announced a naval blockade of Saudi Arabia.
The fighting has virtually paralyzed shipping through the Strait of Hormuz, through which about 20% of the world's oil and gas supplies passed before the escalation.
During the previous escalation of the conflict in the Middle East in April of this year, the price of Brent crude oil rose to $ 120 per barrel. According to Maria Belova, director of research at the Implementation consulting company, a repeat of such a scenario is possible only in the event of large-scale damage to the oil production or transport infrastructure of Saudi Arabia, the United Arab Emirates, Kuwait or Iran, or the start of a full-scale ground military operation that will lead to prolonged supply disruptions. The current escalation increases the risks for oil exports, but it does not mean that they will stop completely.
The expert explained the increase in quotations to $ 90 per barrel by a combination of several factors. Military activity in the Hormuz area increases concerns about supply disruptions, which adds a risk premium to the price. Additional pressure is exerted by reports of strikes on infrastructure and oil tankers, which push traders to purchase physical volumes of oil.
However, with signs of de-escalation, prices may decrease, Maria Belova believes. This will be facilitated by guarantees of safe navigation through the Strait of Hormuz, the development of alternative supply routes and the redistribution of export flows.
A rapid increase in oil prices may begin after overcoming the $93 per barrel mark, according to Lyudmila Rokotianskaya, an expert on the stock market at BCS World of Investments.
"Given that many countries' oil reserves were significantly depleted during the first stage of Operation Epic Fury, we may see prices rise significantly above $110 per barrel during the secondary oil rally," the expert explained.
With the further escalation of the conflict in the Middle East, the cost of Brent can reach $120 per barrel, according to Igor Yushkov, a leading analyst at the National Energy Security Fund. According to him, one of the possible scenarios should be considered the entry of the Yemeni Houthis into the conflict on the side of Iran. In this case, they may try to block the Bab-el-Mandeb Strait (the sea route connecting the Red Sea with the Gulf of Aden and the Indian Ocean) or strike at the port of Yanbu, through which a significant part of Saudi Arabia's oil exports pass. This will increase the supply shortage in the global market and may push prices to new highs.
However, Alexey Belogoryev, director of research and development at the Institute of Energy and Finance, believes that it is premature to expect a Brent price of $120 per barrel. There is no certainty yet that the price will exceed even $100 per barrel, he noted.
What factors will affect the cost of raw materials?
The new round of escalation in the Middle East is reflected not only in the cost of Brent, but also in the prices of Russian varieties — Urals and ESPO, Lyudmila Rokotyanskaya noted.
The Urals price is traditionally determined based on Brent quotations, taking into account the discount to Russian oil, as well as logistical costs and delivery conditions. As of July 20, a barrel of Urals was worth $67.
According to Maria Belova, now the discount on Urals is about $20-25 per barrel. At the same time, according to the Argus pricing agency, which was quoted by Interfax on July 16, in the first half of the month, the discount, depending on the port, was at the level of $26-27 per barrel. For supplies to India, the discount was $11.16 per barrel, to China — about $5. The discount on ESPO grade shipped through the port of Kozmino to Dubai benchmark oil reached $8.1 per barrel in the first half of July.
According to Maria Belova, if Brent gains a foothold in the range of $80-90 per barrel, Urals will be in the range of $55-75. With a further escalation of the conflict, prices may rise even higher, but a significant reduction in the discount on Russian oil should not be expected.
Rising oil prices increase the oil and gas revenues of the Russian budget. Tax revenues are calculated based on the average price of oil for the previous month: for example, the average price for July will determine payments in August. The calculation takes into account the quotes of not only Urals, but also ESPO, as well as the ruble-dollar exchange rate, Igor Yushkov noted. In the federal budget for 2026, the base price of Urals is set at $59 per barrel, whereas in June its average cost was $63.5.
According to the expert, if the average price of Brent reaches $ 120 per barrel, Russian oil will cost about $95-100. Even with the current ruble exchange rate, this will allow the budget to receive oil and gas revenues significantly higher than planned and bring them closer to the target values envisaged for 2026.
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