Bank of America is optimistic about the long-term oil price outlook and holds a positive stance towards North American oilfield service companies.

Investing.com - Iran appointed Mojtaba Khamenei as the country’s new Supreme Leader on Monday. The son of the late leader Ali Khamenei is believed to hold a more hardline stance than his father. The Strait of Hormuz has effectively been blocked, forcing regional oil storage facilities to fill rapidly, pushing Brent crude near-month futures above $105 per barrel and TTF natural gas prices above €60 per megawatt-hour.

Due to the blockade of the Strait of Hormuz and the rapid filling of regional oil storage, Iraq and Kuwait have cut production. Qatar has halted operations at its liquefied natural gas facilities. Saudi Arabia and the United Arab Emirates have more flexibility to adjust export routes, but if the blockade persists, they may be forced to reduce production partially.

Bank of America reports that offshore operations in Qatar and Kuwait, onshore operations in Iraq, and some offshore activities in the UAE have experienced drilling platform suspensions and activity halts. Saudi Arabia’s operations currently appear to be normal. These disruptions could lead to decreased activity and increased costs for oilfield service companies in the Middle East, putting pressure on profitability through the first half of 2026.

The supply disruption has lasted nine days, and Bank of America estimates it will take about 30 days to fully restore normal oil and liquefied natural gas supplies. The bank previously identified heightened regime hardline policies as the most bullish scenario for crude oil in its March 1, 2026 report, suggesting that prolonged conflicts in the Middle East could push Brent crude prices above $100 per barrel.

Bank of America expects this disruption to significantly tighten the supply-demand balance and inventories for the remainder of 2026. A prolonged Iran conflict or sustained hardline regime ceasefire agreements could keep geopolitical risk premiums in oil prices elevated. The bank views this as positive for the mid- to long-term oilfield services industry, especially for onshore North American operations and offshore deepwater drilling.

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