Kotak Institutional Equities Revises FY27 Crude Oil Price Assumption to $100 a Barrel

Kotak Institutional Equities has revised its crude oil price assumption for the financial year 2027 to USD 100 per barrel, moving up from its earlier estimate of USD 90 per barrel. The adjustment is attributed to prolonged supply disruptions and renewed attacks linked to the West Asia conflict, which has continued for eight months with limited visibility on when normal conditions will return.

Despite the upward revision for FY2027, the brokerage has retained its crude oil price assumption at USD 75 per barrel for FY2028 and the long term. The outlook factors in an expectation that prices will ease in the second half of FY2027, provided hostilities do not intensify further and supply flows continue to normalize.

According to the latest report by Kotak, the ongoing conflict has resulted in one of the largest oil supply disruptions in recent history. The report noted that Brent crude has averaged nearly USD 104 per barrel so far in FY2027 and was trading at USD 128 per barrel during the assessment period. Dated Brent averaged USD 126 per barrel in October so far, while the average for FY2027 to date stood at USD 104 per barrel.

Renewed attacks on Saudi infrastructure and oil tankers in the Strait of Hormuz have escalated tensions, pushing crude oil prices to six-month highs recently. Additionally, freight rates for crude oil and product tankers have reached multi-year highs. Despite these pressures, the global oil markets have shown resilience and remained largely well managed, according to the findings.

The brokerage pointed out that oil flows through the Strait of Hormuz have recovered significantly, even though renewed attacks have added uncertainty to energy supply outlooks. The revision specifically targets near-term assumptions, while the longer-term outlook remains unchanged.

Ultimately, the updated forecast reflects a higher expected average crude oil price for FY2027 alongside the expectation that prices could moderate as supply conditions recover. The outlook remains dependent on the progression of the conflict and the ongoing recovery in global oil supply.

"The upward revision of the FY27 crude oil price assumption to $100 a barrel highlights the ongoing sensitivity of global energy markets to geopolitical conflicts in West Asia. While long-term assumptions remain anchored at $75 per barrel, businesses and macroeconomic planners must account for near-term volatility in freight rates and fuel costs. Monitoring these supply chain disruptions will be crucial for managing operating expenses across energy-dependent sectors in the coming quarters." — Dr. Shishir Gupta, Founder & CEO, StartupLanes