KUALA LUMPUR: The World Bank Group has forecast that Brent oil prices will remain elevated in the near term before easing, averaging US$86 (US$1=RM3.96) per barrel in 2026 and US$70 per barrel in 2027.
This projection assumes that the most acute phase of supply disruptions related to the conflict in West Asia ends in May, said the bank in its April 2026 Commodity Markets Outlook released recently.
The report said Brent crude averaged US$69 per barrel in the first two months of 2026 before rising to about US$100 per barrel in March and April.
"It also assumes that oil exports from West Asia will recover following the peak disruptions, stabilising around pre-war levels by the final quarter of the year," it added.
The World Bank said that, provided that suspended production resumes and trade largely normalises in the second half of the year, the recent surge in oil prices is anticipated to steadily abate.
By late 2026, oil markets are assumed to trend toward pre-conflict dynamics, although with lingering geopolitical risk premiums and the after effects of a period of severe dislocations and intense uncertainty, it said.
It noted that global oil consumption is projected to decline by 0.1 million barrels per day (mb/d), or 0.1 per cent, in 2026, attributed to some countries curbing demand due to disruptions in West Asia, while others can accommodate increased consumption, albeit at levels below earlier projections.
In the second quarter this year, the bank also projected oil supply to drop by almost 7 mb/d to 98.4 mb/d, the biggest quarterly fall since the COVID-19 pandemic.
If the baseline assumptions hold and supply disruptions in the Middle East ease around mid-year, global production is expected to recover to an average of 108.3 mb/d in the second half of 2026.
It said the risks to the oil price forecast are tilted to the upside as higher prices are likely to materialise if supply and trade disruptions related to the war are more extensive than assumed in the baseline forecast.
Downside risks include faster-than-expected electric vehicle adoption, further shocks to global economic growth and higher-than-expected supply, primarily in 2027.
The World Bank also projected that the most acute phase of production and trade disruptions in the liquefied natural gas (LNG) segment would end in May 2026, with LNG exports from West Asia expected to resume in the following months without further damage to infrastructure.
"The European price is expected to surge by about 25 per cent (y-o-y) in 2026, as LNG supply disruptions in West Asia and medium-term damage to facilities in Qatar create strong global competition for LNG - which often sets the marginal price in Europe - to refill depleted inventories.
"The European price is projected to decline by 20 per cent in 2027 as supply disruptions subside," it said. - Bernama
