Eni CEO warns oil may break above $100 by early 2027 on Middle East war

The global oil market faces a structural breakout above $100 a barrel by early 2027 if the Middle East conflict persists, threatening to reignite inflation and curb energy demand.

The roughly $80-to-$100 range that has contained crude prices since the US-Iran war began in late February is becoming unsustainable, Claudio Descalzi, chief executive officer of Italian state-controlled Eni SpA, said in an interview with Il Sole 24 Ore published Saturday. Strategic stockpile releases have helped cap prices so far, but global reserves are finite and the strategy carries growing risks.

"The long-term solution is greater energy security through diversification of supply sources and routes," Descalzi said.

Global oil inventories have fallen by an average 3.8 million barrels a day since the conflict began, accelerating to 4.6 million barrels a day in May, as disruption linked to the war choked flows through the Strait of Hormuz and other chokepoints. Brent crude surged from about $70 before the conflict to around $120 at its peak, before settling into the current range with the help of coordinated releases from US Strategic Petroleum Reserve and allied stockpiles.

The warning from one of Europe's most influential oil executives comes as the International Energy Agency cautioned that the US-Iran escalation could threaten a projected market surplus in 2027. The IEA had previously forecast that rising supply from the Americas and elsewhere would tip the market into surplus next year, but that outlook now hinges on whether the conflict disrupts production from the broader Middle East.

The Supply Diversion Imperative

Descalzi said countries should focus on producers in North and sub-Saharan Africa, Latin America and Southeast Asia while reducing dependence on controlled maritime passages. Eni itself has limited exposure to the Middle East, with most of its upstream production concentrated in Africa and Latin America — a geographic positioning that insulates it from the worst of the current disruption but cannot shield the broader market.

The supply crunch is being compounded by Russia's diesel export ban, which deepened the global supply squeeze in recent weeks. The combination of Middle East disruption and Russian export restrictions has left refineries in Europe and Asia scrambling for alternative barrels, pushing diesel margins to multi-year highs.

AI Demand Adds Urgency

Power demand generated by artificial intelligence technologies and the rapid expansion of data centers has increased the urgency of ensuring security of energy supply, Descalzi said. The IEA estimates that data center electricity consumption could double by 2030, adding the equivalent of Japan's entire power demand to global grids — a structural shift that tightens the relationship between oil prices and broader energy costs.

The last time oil broke decisively above $100 and stayed there was in 2022 following Russia's invasion of Ukraine, when Brent averaged $99 a barrel for the year and global inflation peaked above 9 percent in major economies. A repeat scenario would complicate central bank efforts to normalize interest rates, particularly if higher energy costs feed through to core inflation measures.

If the conflict de-escalates, the market could still swing to surplus by 2027 as new supply from Brazil, Guyana and US shale comes online. But if the war continues or widens, Descalzi's Q1 2027 timeline for a breakout may prove conservative — the IEA has already flagged that the surplus it once projected is at risk.

This article is for informational purposes only and does not constitute investment advice.