OCBC cuts oil forecasts as Strait of Hormuz’s flows rebound - WSJ

OCBC has revised its oil price forecasts lower following a gradual resumption of flows through the Strait of Hormuz, a critical global oil transit route. The Strait, which accounts for approximately 15% of global oil demand and 20% of global LNG supply, had been effectively closed for several weeks following US and Israeli strikes on Iranian facilities, prompting insurers to withdraw coverage. This closure led to a significant disruption of around 14 million barrels per day of oil supply and the 850 million barrels loss in the first two months of the conflict.

With flows beginning to return in May and June, OCBC now anticipates a slower-than-expected recovery in global oil markets. The bank’s revised forecasts reflect the partial resumption of exports through the Strait, as well as the continued challenges in restoring full pre-war levels of production and infrastructure. While OPEC+ has taken steps to increase production, including a planned 206,000 b/d increase in April, these efforts may be rendered ineffective if flows through the Strait remain constrained.

The LNG market is also seeing some relief, though disruptions continue to strain global gas supplies. Around 81 million metric tons of LNG transited the Strait in 2025, and any prolonged closure would reignite competition between Asia and Europe for available cargoes. However, with the Strait reopening, OCBC expects a moderation in price pressures, though the market remains vulnerable to renewed escalations or infrastructure damage that could delay a full recovery.