Crude Oil Set for Massive Rally: Prices Could Hit $90 as Global Inventories Deplete Amid Supply Scarcity

Crude Oil Set for Massive Rally: Prices Could Hit $90 as Global Inventories Deplete Amid Supply Scarcity​

International crude oil prices face significant upward pressure, with projections suggesting a potential surge to $80-$90 per barrel in the second half of 2026. S&P Global Energy states that this price increase is anticipated as global oil inventories continue to shrink following severe supply disruptions caused by the West Asia conflict.

The firm notes that while the reopening of the Strait of Hormuz promises a recovery of energy flows and market confidence, participants are assessing that normalization and inventory replenishment will be a protracted process. Jim Burkhard, Vice President for Oil Markets at S&P Global Energy, stated that the limited price reaction to the closure—which he called the largest oil supply disruption in history—is surprising given the gravity of the event.

Supply Shocks and Price Outlook​

The closure of the Strait of Hormuz resulted in a 15 million barrels per day (b/d) cut in Gulf liquids production. Despite this immense shock, the immediate price movement was surprisingly contained due to proactive inventory and demand management across global markets.

This mitigation included aggressive crude import reductions by key consumers such as China and Japan, coupled with increased exports originating from the US, according to S&P Global Energy analytics. Burkhard maintains that if flows through Hormuz and Gulf production continue to recover slowly, upward price pressure will re-emerge as inventories fall further throughout June and July.

Geopolitical Instability Drives Resilience in Energy Markets​

The entire energy landscape is rapidly shifting, with geopolitical realities emerging as a key determinant of long-term security across upstream markets, LNG trade, and maritime logistics. S&P Global Energy emphasizes that resilience has become the defining metric for value in global and Indian upstream sectors.

Nick Sharma, Executive Director, Upstream Energy at S&P Global Energy, elaborated that accessing stable resources, diversifying supply portfolios, and accelerating project timelines are now prioritized over simple cost optimization or pure scale. This structural shift reflects a heightened focus on resource security globally.

Market Adaptation and Crude Export Recovery​

The initial disruption was severe, with vessel movements through the Strait plunging to 10% of pre-conflict levels. However, the global energy system demonstrated remarkable adaptability. Alternative routing via the Red Sea and expanded ship-to-ship transfers east of Hormuz helped support this resilience.

These adaptations allowed Middle East crude exports to rebound effectively, exceeding 10 million b/d by June. Benjamin Tang, Director at S&P Global Energy, noted that the ability of both producers and consumers to reroute supply and secure alternative barrels mitigated what could have been a far more severe global energy crisis.

India’s Strategic Diversification Mitigates LNG Risk​

The conflict also disrupted approximately 17 percent of global LNG supply. Despite this volatility, India, as the world’s fourth-largest LNG buyer, experienced minimal impact through strategic diversification.

By sourcing LNG from nations including Oman, the US, Nigeria, and Angola, S&P data showed that Indian LNG imports dropped only 5% and 2% year-over-year in April and May of 2026. Johan Utama, Principal Research Analyst at S&P Global Energy, expects India to maintain these diversified sourcing considerations as a core strategy to mitigate future disruptions.