Piper Sandler lifted its second-half 2026 Brent crude price forecast by $10 per barrel to $90/b, citing an entrenched Middle East supply stalemate and deep cuts to Russian refining capacity that have tightened the global oil balance more than the firm anticipated in July.
The revision has direct implications for integrated oil majors and pure-play E&P companies across the S&P 500 energy sector, where higher sustained Brent prices flow almost directly into cash generation and shareholder return capacity.
Piper Sandler described the upgrade as “mostly a mark-to-market exercise,” noting that Brent averaged $88/b through Q3, well above the $80/b mid-point the firm had set in mid-July when a memorandum of understanding existed and Strait of Hormuz traffic was running at a higher baseline. That geopolitical backdrop has since deteriorated materially.
“Not only has Mideast supply been more constrained, but there’s been zero diplomatic or military movement toward ending the conflict. The term Stalemate applies,” the firm wrote.
Piper Sandler also noted that “drastic cuts to refining capacity in Russia add price support,” shrinking an outlet for crude that would otherwise weigh on global benchmarks.
Perhaps the more striking element of the report is the firm’s candid admission that its new target may still be too low. “We fear that $90/b for Q4 may prove an under-estimate,” Piper Sandler wrote, which is a rare instance of a research house flagging upside risk to its own freshly raised forecast.
With Q3 already averaging $88/b per Piper Sandler’s data, the gap between that realized level and a $90/b Q4 estimate is narrow enough that any further supply disruption in the Strait of Hormuz or additional Ukrainian strikes on Russian refining infrastructure could push the benchmark through the firm’s ceiling.
Below-consensus natural gas stance
On U.S. natural gas, Piper Sandler’s tone is notably more subdued, and the firm is explicitly at odds with consensus. Gas inventories maintained a 150 billion cubic foot surplus relative to five-year norms throughout the injection season, and prices averaged below $3/MMBtu in both Q2 and Q3, according to the firm’s report.
Piper Sandler attributes the balanced supply picture to steady 4-5% annual production gains that have kept US natural gas “in easy equilibrium.” The firm reiterates below-consensus forecasts for Q4 and has added quarterly granularity to its 2027 outlook, though specific quarterly figures were not disclosed in the available report.
The below-consensus gas stance rests on a structural argument, not a cyclical one. “US producers can comfortably grow production and infrastructure to meet strong domestic power-demand and LNG export scenarios at $3+ MMBtu,” Piper Sandler wrote.
That framing matters for investors in US gas-weighted E&Ps and LNG infrastructure names: the firm is essentially arguing that the long-anticipated demand surge from AI-driven power loads and expanding LNG export capacity does not require a price spike to call forth adequate supply. Producers generating sufficient returns at $3/MMBtu have less incentive to discipline output, which is the core reason Piper Sandler sits below the Street on gas.
Source: Investing.com
