UK forecasts $100 oil through 2028 even with Iran deal

The UK government revised its oil price forecasts upward, projecting crude near $100 a barrel through 2028 even if a US-Iran peace deal is reached, according to Bloomberg.financialpost
The Strait of Hormuz has been largely blocked for over three months; analysts say restoring full oil flows could take months after a ceasefire.spglobal
The UCLA Anderson Forecast released Wednesday found the Iran oil shock has replaced tariffs as the top U.S. inflation threat, with prices projected to peak at 4.5%.ucla

UK Sees Risk of $100 Oil Until 2028 Despite Potential US-Iran Deal

The UK government has revised its internal oil price forecasts upward, assessing that crude could remain around $100 a barrel until 2028 even if a US-Iran peace deal is reached, according to a Bloomberg News report published Thursday. The analysis, which has not been made public, warns that energy flows from the Persian Gulf are expected to take far longer to recover than previously anticipated, pointing to more persistent inflationary pressures and a worsening global economic outlook.financialpost

A Long Road to Recovery

The revised UK forecast reflects a growing consensus among energy analysts that reopening the Strait of Hormuz — largely obstructed for more than three months since the US and Israel launched strikes against Iran — will not quickly restore oil markets to pre-war conditions. S&P Global’s CERA unit estimated in April that Middle East crude producers could require five weeks to seven months to fully restore output once fighting ends, with some 14.2 million barrels per day of supply sitting in disrupted fields. Energy Aspects, a consultancy, said in a June 1 analysis that oil transits through the strait had reached only a fraction of pre-war tonnage and projected flows at just 50 percent of normal levels by end-June.spglobal

The International Energy Agency warned in May that oil supplies could remain constrained for months even after shipping resumes, revising its forecast for global oil demand to contract by 420,000 barrels per day this year.wsj

Oil Shock Replaces Tariffs as Top US Risk

The UK assessment aligns with the June 2026 UCLA Anderson Forecast, released on June 3, which found that the Iran-related oil shock has replaced tariffs as the leading inflation threat to the US economy. UCLA economists now project US inflation peaking at 4.5 percent, GDP growth holding at 2.1 percent rather than accelerating, and unemployment rising modestly to 4.5 percent.ucla

Oil prices have remained elevated amid uncertainty over US-Iran negotiations. Brent crude rose about 1 percent on June 2 as Iran reviewed a US proposal to halt hostilities, according to Reuters, though fresh exchanges of strikes between the two sides have continued to cloud the outlook. President Trump has said a deal to extend a ceasefire established in April could come within days, but US Secretary of State Marco Rubio cautioned that Iran’s willingness to discuss its nuclear program does not guarantee an agreement.cnbc

The UK’s earlier internal assessment, reported by Bloomberg in March, had warned oil could soar above $150 a barrel in a worst-case scenario. The updated forecast suggests that even under more optimistic assumptions, elevated prices will persist well beyond any peace agreement.x