Oil markets are funny things. Headlines scream one direction, but the fundamentals—those stubborn realities of supply, demand, and inventories—have a way of reasserting themselves.
That’s exactly what Enverus Intelligence Research’s latest Fundamental Edge report, “Let’s Make a Deal,” makes clear. While traders chase peace-deal euphoria and fret over tweets, the data points to Brent crude settling in around $110 per barrel in the second half of 2026, with $105 in 2027. That’s a sharp upgrade from their prior $95 call, and it’s grounded in something far more reliable than the daily news cycle: persistently low global inventories.
Enverus models a scenario where a U.S.-Iran peace deal lands by the end of June, cracking open the Strait of Hormuz. Markets might sell the headline initially—peace is supposed to mean more supply, right? But the ramp-up won’t be like flipping a switch to light up the living room. Flows today sit at roughly 2 million barrels per day. Even in the best case, they climb gradually to 16 million by 2027, still shy of the pre-war 20 million. Some rerouted barrels will likely stay rerouted.
The result? OECD inventories hover well below pre-crisis cushions. That level, per Enverus’ long-term stock-to-price correlations, supports triple-digit Brent.
So, why does the Brent price currently hover in the low 90s? Al Salazar, the report’s author and director at EIR, put it succinctly in our conversation: Financial markets are “highly headline driven.” Traders are gun-shy about calling a bull market, knowing any spike risks a bearish Truth Social post by President Trump. But fundamentals tell a different story. Low stocks are drawing down further amid a flow issue that doesn’t vanish overnight. “Whenever you fix the flow issue,” Salazar notes, “you’re still left with low stocks. And that drives the higher-for-longer thesis.”
This is simple math, not speculation. Enverus sees cumulative stock draws keeping cushions thin even as Persian Gulf barrels gradually return. A modest level of demand destruction helps moderate things, but not enough to refill inventories quickly. Strategic reserve refills add another layer of price support.
For American producers, this is welcome news. The report lifts U.S. Lower 48 oil growth expectations to 300,000 bpd by exit-2026 and 500,000 by the end of 2027, with the Permian Basin growing fastest. Infrastructure bottlenecks remain related to pipelines, processing, and takeaway capacity, but higher prices will incentivize activity. A sticky higher Brent price means more rigs, more wells, and more American energy dominance. The U.S. count of active drilling rigs is already responding, up more than 10% since March.
For U.S. consumers, Salazar says a Brent price of $100-$110 supports a $5 price for regular gasoline at the pump. Gas at that level will create knock-on economic impacts which Enverus describes as the “Five-five-five” rule: $5 gasoline at the pump feeds 5% inflation, which slams the S&P 500 and five-year Treasury yields. We last saw it in 2022 during the Ukraine invasion: Energy shocks cascade quickly into equities and bonds.
Energy markets are efficient when allowed to function, but even with a deal, normalization takes time, lingering into 2027 or beyond. Inventories don’t rebuild in a quarter. Demand, while elastic at the margin, remains robust globally. And U.S. supply, while growing, faces real limits from years of underinvestment in midstream and the practical pace of drilling.
The Trump administration’s approach of prioritizing American production, realistic diplomacy, and avoiding self-inflicted wounds like endless sanctions without offsets aligns well with this outlook. Unleashing domestic supply while navigating deals that reopen chokepoints without flooding the market overnight is smart policy. It avoids both shortages and crashes.
Energy markets spent the Biden years being distorted by net-zero obsessions, subsidized intermittents, and regulatory hostility. This report is a reminder that hydrocarbons remain the backbone of global economic growth. Low stocks don’t lie, and gradual supply responses reflect market realities. A $110 Brent price sends a signal that can’t be tweeted away.
American producers are positioned to benefit. Consumers will feel the pinch at the pump, but that pain underscores the need for more domestic barrels, not less. Policymakers should take note: The market reality is higher for longer, and efforts to override it with bad policy decisions will only prolong the economic pain.
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