Shenwan Hongyuan says market drivers have shifted in H2 2026 from an AI narrative to recurring US–Iran conflict and energy supply shocks. US political pressure to push down oil pre-midterms to ease inflation is likely to strengthen, and enforcement appears stronger this cycle. Trump has tied a ceasefire and lower oil prices to the midterms and signalled oil could fall after the vote. Supply-side constraints include low inventories, disrupted strait transit, limited refinery flexibility and widen

Shenwan Hongyuan says market drivers have shifted in H2 2026 from an AI narrative to recurring US–Iran conflict and energy supply shocks. US political pressure to push down oil pre-midterms to ease inflation is likely to strengthen, and enforcement appears stronger this cycle. Trump has tied a ceasefire and lower oil prices to the midterms and signalled oil could fall after the vote. Supply-side constraints include low inventories, disrupted strait transit, limited refinery flexibility and widening gasoline/diesel crack spreads; the forward curve shows a significant spot premium and the supply buffer is weaker than in 2018, with political price suppression occurring later. Under a neutral scenario, Shenwan expects prices to stay elevated before US midterms (central estimate ~$100/bbl); post-midterms oil could decline quarter-by-quarter in late‑2026 to early‑2027 toward roughly $75/bbl, though inventories and refined‑product bottlenecks will keep the central level above pre‑conflict norms.