Brent Holds Above $106 as Iran Standoff Deepens Q4 Inventory Concerns
Mirae Asset Sharekhan's bullish crude call gains traction as global buffer stocks draw down and U.S.-Iran tensions show no sign of easing.
ICE Brent crude front-month traded at $106.80 a barrel on Thursday (2026-09-10), down 0.56% on the session, but nearly 15% above the $93 level it reached on August 20 (2026-08-20) when TradingKey reported the contract hitting a fresh seven-month high on escalating U.S. sanctions on Iran and accelerating global inventory drawdowns. Since early August (2026-08-05), Brent has gained more than 20%.5
The pace of those drawdowns has become the dominant variable for Q4 positioning. Citi warned on August 20 (2026-08-20) that global oil stocks were approaching a 70-day inventory buffer line, with refined product markets under severe supply pressure and margins elevated.5
Mohammed Imran, analyst at Mirae Asset Sharekhan, laid out the bullish case on July 31 (2026-07-31): Brent would average around $80 if the conflict did not escalate, or average $90 by year-end should Hormuz disruption persist into mid-September. Brent has since traded past both benchmarks. Imran described the risk as skewed northward.4
The path to those levels was not direct. A truce announced the weekend before June 16 (2026-06-16) triggered what InvestingCube described as a dramatic bearish shift, with traders unwinding geopolitical positioning across the curve. By late June (2026-06-30), Brent was testing support near $73, approaching the $70 mark as sellers attempted to reassert a downtrend.2,3
The recovery that followed was steep. From early August (2026-08-05), Brent added over 20% in the weeks that followed as U.S. sanctions enforcement tightened and inventory data continued to show draws, TradingKey reported.5
Yet China's demand picture complicates the bull case. June crude oil imports fell 41% to a near-decade low of 29.27 million tons, or approximately 7.2 million barrels per day, according to data cited by Mirae on July 31 (2026-07-31). That reversed a record early 2026 pace of 11.99 million barrels per day reported by Yahoo Finance on May 12 (2026-05-12).4,1
Chinese crude inventories remained large despite the slowdown in imports. Stocks stood at around 1.2 billion barrels as of late July (2026-07-31), having fallen only 54 million barrels since early May, Mirae data showed. The slow destocking pace suggests Chinese refiners were drawing on onshore supplies rather than lifting spot cargoes — a pattern that, if sustained, would limit the demand pressure that underpins the bullish inventory thesis.4
Supply, not demand, is the nearer-term driver. Analysts surveying the market in late June (2026-06-30) expected demand to rebound strongly after war-related supply disruptions, refilling stockpiles that had been heavily drawn during the conflict. A faster-than-expected demand recovery in Q3 would ease the Q4 inventory tightness at the center of the Mirae view.3
But Citi's base case provides the sharpest counterpoint. Under a scenario where Iran negotiations succeed and Hormuz reopens, Citi projects Brent declining to $60 by 2027. The distance between that forecast and $106.80 trading on Thursday (2026-09-10) reflects the accumulated geopolitical premium embedded in the front of the curve.5
With U.S.-Iran negotiations unresolved as September progresses and sanctions enforcement tightening, the next test of Mirae's Q4 buffer-stock forecast is the pace at which Chinese crude imports recover. June's figure of roughly 7.2 million barrels per day, a near-decade low, will need to reverse sharply for inventories to rebuild before winter demand peaks.4,5