The Place Where Global Energy Balance Breaks
Following a major escalation on 28-Feb-26, when the US and Israel launched coordinated airstrikes on Iran, targeting military and govt. assets, Brent prices surged sharply, to c. USD 80/bbl (from USD 73/bbl pre-conflict), reflecting a material repricing of geopolitical risk. The US–Iran conflict has since triggered broad disruptions across global oil and gas supply chains, centered on the Strait of Hormuz, which carries >20% of global oil and LNG flows. The disruption intensified after Iranian counterattacks, damaging multiple tankers and flattening US military bases across the Gulf, with >150 vessels forced to anchor in the strait over several days, highlighting severe dislocation in maritime flows.

Subsequently, Iran expanded strikes to regional energy infrastructure, targeting key oil and gas facilities across Oman, Saudi Arabia, UAE and Qatar, further amplifying supply disruption risks. On the supply side, disruptions span major assets, including Saudi Aramco’s refinery (c.600 kbpd) and partial constraints on the East-West pipeline (c.700 kbpd), alongside outages across the UAE (c.1 Mboepd), while ADNOC also reported disruptions across fields contributing c.1 Mboepd. For LNG, Qatar temporarily suspended operations at the Ras Laffan complex, including RasGas and Qatargas assets operated by QatarEnergy, disrupting >75 Mtpa capacity, equivalent to c.20% of global LNG trade. QatarEnergy holds c.79 mtpa in long-term contracts, with key offtakers such as Petronet LNG exposed at >7.5 mtpa. A one-month outage could remove c.7 mt (c.1.5%) of global LNG supply, reinforcing near-term market tightness. In aggregate, we estimate c.12 Mboepd of oil supply has been directly impacted, equivalent to c.6% of global supply, underscoring elevated uncertainty and a structurally-tighter global energy balance.

Oil & Gas Outlook: The Prolonged Supply Storm
Building on these developments, global geopolitical tensions remain high and the situation fragile, with the recent ceasefire failing to deliver any durable resolution, raising the risk of prolonged disruption in the Strait of Hormuz. While Iran had previously allowed selective tanker passage for aligned countries, imposing transit fees of c. USD 2 mn/VLCC (c. USD 1/bbl), traffic remained severely constrained at c.10 vessels per day, representing only ~8% of normal throughput. The situation has since deteriorated, following failed negotiations, prompting the US to initiate a naval blockade on maritime traffic linked to Iranian ports, materially increasing the risk of supply bottlenecks across the Persian Gulf, as tankers increasingly avoid the route.

A key downside scenario centers on Kharg Island, Iran’s primary export hub, with typical capacity of c.1.5–1.6 Mmbopd, handling c.90% of crude shipments and serving as a critical lifeline for the economy; it is supported by deepwater terminals capable of loading VLCCs. While disruption to this asset has so far been limited, sustained attacks would materially impair Iran’s export capacity, with a prolonged outage potentially removing roughly 1.4–1.5% of global supply and adding around USD 5–7/bbl to the existing geopolitical premium. In aggregate, further tightening in supply, coupled with infrastructure damage requiring c.1–5 years of repair across affected assets, would point to a more persistent structural shock to global energy supply and a prolonged supply lag. In addition, current war dynamics remain in a stalemate, with the conflict extending beyond one month and showing limited signs of resolution. We expect strategic reserve releases from major oil-consuming countries to only provide temporary relief, with spare capacity likely to be largely depleted within c. 2–3 months from the onset of the conflict. Critically, current price formation reflects forward market pricing rather than full spot market dislocation, suggesting that the real supply shock has yet to be fully priced in. As such, we believe the more pronounced impact of the conflict on global energy balances and pricing is likely to materialize over the coming months. Against this backdrop, we upgrade our FY26F oil price assumption to USD 100/bbl (from USD 65/bbl), reflecting a materially higher geopolitical risk premium embedded in the market.

Upgrade to OVERWEIGHT with MEDC as Top Pick
We upgrade our rating on the oil & gas sector to OVERWEIGHT (from NEUTRAL), supported by resilient oil prices amid persistently tight supply conditions. We thus raise our TP for MEDC to IDR 2,500/sh (from IDR 2,300/sh) and AKRA by 26.7% to IDR 1,900/sh, while maintaining PGAS at IDR 2,300/sh. Accordingly, our revised pecking order is MEDC > AKRA > PGAS (from MEDC > PGAS > AKRA).

Oil & Gas - Higher for Longer

Oil & Gas - Higher for Longer

Hernanda Cahyo

Oil and Gas Sector

23 April 2026 - 08.41am

Oil & Gas - Higher for Longer

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