Global oil markets are staying tight, and prices are feeling the squeeze. TD Securities says the world simply isn't producing enough crude to match demand right now. Their high-frequency data on global and Chinese balances, along with Middle Eastern output, points to persistent deficits that won't disappear soon.
The world simply isn't producing enough crude to match demand right now, and persistent deficits won't disappear soon.
A big driver behind this tightness is the Strait of Hormuz disruption, which has pulled an estimated 9 to 10 million barrels per day out of global flows. That's a massive supply shock, and it's kept seaborne crude markets under pressure. Recovery has been slow, too. Output hasn't bounced back quickly after conflict-related disruptions, and OPEC+ production management is limiting how fast lost barrels return. Spare capacity within OPEC+ remains constrained as well, since some production cuts are still in place. TD doesn't expect real normalization until December 2026 at the earliest.
Inventories tell the same story. Crude and product stocks keep falling as consumption outpaces new supply. Low fuel inventories are pushing crack spreads higher, which raises the price refineries pay for crude. Rebuilding these buffers won't be cheap or easy — it'll likely require sustained higher prices to give producers and consumers the incentive to restock. IEA and EIA data back this up, showing tight markets into mid-2025, with real inventory builds not expected until later. Cross-border oil payments tied to these trades also carry settlement risk, since currency and crude transactions often clear at different times across time zones, exposing counterparties to potential default before both sides of a deal are completed.
Given all this, Brent has been trading near $90 to $100 per barrel in mid-2026, and TD expects prices to stay $5 to $10 above current levels over the next few months. TD's longer-term view is even more striking: Brent averaging around $104 in the second half of the year, with a possibility of spiking past $150 if regional scarcity worsens. That's a sharp contrast to consensus forecasts from the EIA, World Bank, and Barclays, which mostly expect Brent to ease toward $60 to $70 by 2026.
This divide matters for African economies tied to oil imports and exports alike. Nigeria and Angola, both oil producers, could see currency support if prices stay elevated, while import-dependent nations like Kenya and South Africa may face inflationary pressure at the pump. Markets will be watching OPEC+ decisions and Hormuz developments closely in the months ahead.
