Despite recent volatility and rising conflicts between Israel and Iran, Brent crude oil prices are expected to average around USD 70 per barrel in FY26, according to a report by Emkay Research.
The report stated that the oil markets remain fundamentally well supplied, with rising production levels from both OPEC+ and non-OPEC+ countries.
It said "we continue to assume Brent price at USD70/bbl for FY26. Fundamentally, oil markets are well supplied with rising production." This steady supply is expected to help stabilise prices in the coming weeks, even though geopolitical risks may cause short-term volatility.
The report noted that Israel's attack on Iranian nuclear sites and personnel had initially triggered a sharp 12-13 per cent jump in oil prices, with Brent reaching close to USD 80/bbl.
Since then, prices have settled around USD 75/bbl, despite ongoing attacks from both sides. Iran has responded by hitting Israeli cities with missiles, and Israel has intensified its strikes on Iran. Signals from the US administration regarding a ceasefire remain unclear.
According to the report, unless there is lasting damage to oil and gas infrastructure, similar to earlier patterns seen during the Russia-Ukraine conflict, oil prices are likely to stabilise. A ceasefire could even bring Brent prices down below USD 70/bbl.
The report also highlighted that Iran has partially shut its South Pars gas field following Israeli attacks. A major fuel depot and a gas refinery were hit, but the impact seems limited to domestic markets. Israel has suspended operations in two of its gas fields that export to Egypt and Jordan.
As a result, spot LNG prices have increased to around USD 13.5/mmbtu, compared to USD 12/mmbtu before the conflict.
The report further noted that oil markets in 2025 have remained well supplied with rising inventories. Although near-term volatility may continue, the average Brent crude price for the year is still expected to be around USD 70/bbl.
At this price level, both upstream oil players and oil marketing companies (OMCs) are in a safe zone. However, the report believed OMCs offer a more attractive valuation and better risk-reward profile.
The report also flagged concerns over the gas market, as the early onset of monsoons has impacted demand, making the gas outlook uncertain.