Bernstein 13 Sep 2026 APAC Oil Oil price outlook and upside from here

Asia-Pacific Oil & Gas Bernstein APAC Oil: Oil price outlook and upside from here

Brent is back above US$100/bbl, and oil price momentum could continue into the Neil Beveridge, Ph.D. mid-term elections taking Brent into the US$120-150/bbl range. Year to date Brent has averaged US$91/bbl and with Brent currently at US$105/bbl, there is upside risk to our forecast of US$90/bbl for the year. In the near term we see limited scope for de- Brian Ho, CFA escalation, although the Trump-Xi meeting in the US could be an opportunity for a renewed peace effort.

Katherine Li Flows out of the Middle East have ticked up, but remain well below pre-war levels. Since expiry of the MOU, total vessel numbers transiting the Gulf have tumbled to almost 50 a week, with 25 vessels a week or <4 vessels per day leaving the Gulf every day on average. Combined oil flows through the Straits of Hormuz and Red Sea (Bab El Mandeb Straits and Kelvin Yuan, Ph.D., CFA Suez Canal) remain less than 7MMBls/d compared to roughly 20MMbls/d pre-conflict. As such, markets remain chronically under supplied.

China imports are ticking higher again and will have to renormalize by year-end. China oil imports. The biggest factor preventing a more rapid increase in oil price has been the reduction in Chinese imports of 5MMbls/d. While some of this is certainly related to demand destruction (Sinopec reported 9% decline in domestic refined product sales in 1H26), China’s reduction in imports has been enabled by tapping into its 1.5bn bbls of commercial and strategic oil reserves. Recently however China has started to increase imports by 1-2MMbls/d which is positive for oil price.

We expect the strategic reserve limit to be reached by the end of September assuming a drawdown rate of 1MMbls/d. We estimate 75% of the 400MMbls of SPR drawdown has now been fully utilized. The US SPR (285MMbls) could reach the approved floor of 252MMbls by October at a drawdown rate of 1MMbls/d. While there is a theoretical floor of 70MMbls which could imply a further 180MMbls of drawdown, we are approaching the limits of the strategic reserve.

Our 2027 oil price forecast of US$78/bbl is now dependent on resolution to the Middle East conflict. While neither the US nor Iran may want to compromise in the run- up to the mid-term elections, we expect there will be compromise at some point. While it is impossible to predict the trajectory of the conflict, our 2027 price forecast bakes in a re- opening of the straits before year-end. We have raised our LNG price to US$22/mmbtu for 2026 and US$15/mmbtu in 2027 to account for prolonged outage of Qatar supply.

Longer term we assume oil price will revert to marginal cost at US$75/bbl. Increasingly we find there are polarized positions on long term price assumptions. Bulls believe in permanent supply disruption, while bears will believe in permanent demand destruction and new supply options ranging from Hormuz bypass to Venezuela. In our view, marginal cost always sets the long term price and this is currency US$75/bbl, which is US $5/bbl higher than long term consensus.

See the Disclosure Appendix of this report for required disclosures, analyst certifications and other important information. Alternatively, visit our Global Research Disclosure Website. First Published: 13 Sep 2026 22:00 UTC Completion Date: 11 Sep 2026 13:26 UTC

Neil Beveridge, Ph.D. September 2026

BERNSTEIN TICKER TABLE 11 Sep TTM Reported EPS Reported P/E (x) 2026 Closing Price Rel. Ticker Rating Cur Price Target Perf. Cur 2025A 2026E 2027E 2025A 2026E 2027E 600028.CH (SinoPec) U CNY )% CNY OLD .HK (SinoPec) U HKD )% CNY OLD .HK (CNOOC) O HKD )% CNY OLD .HK (PetroChina) O HKD % CNY OLD .CH (PetroChina) M CNY % CNY OLD 11.90 WDS.AU (Woodside Energy) M AUD % USD OLD STO.AU (Santos) O AUD )% USD OLD PTTEP.TB (PTTEP) M THB % USD .JP (Inpex) M JPY 3,930.00 4,000.00 18.1% JPY OLD 3, ASIAX 1,962.10 JPL 2,624.23 PRICE TARGET CHANGE / ESTIMATE CHANGE IN BOLD O - Outperform, M - Market-Perform, U - Underperform, NR - Not Rated, CS - Coverage Suspended Source: Bloomberg, Bernstein estimates and analysis.

While oil is above marginal cost (US$75/bbl) and above our average price target for the year, we…