Higher conflict-driven baseline holds – TD Securities

TD Securities strategist Pooja Kumra argues that disruptions in Qatar and Iran justify a higher Oil price baseline for 2026 versus pre-crisis levels. The bank keeps its assumption of a mid‑$90s range and notes that even a 10% Oil rise can significantly lift headline inflation. This Oil reset is seen limiting early ECB and BoE rate moves.

Conflict disruptions support higher Oil base

“As mentioned previously, the ongoing disruption in major facilities in both Qatar and Iran argues for a global reset in oil prices for the year. We maintain our assumption that this new level is $90-95 for 2026, compared with $65 per barrel ahead of the crisis.”

“A 10% uptick in oil still adds 0.3%-0.4% to headline inflation in the short term.”

“An oil shock implies that the inflation hit will precede the growth shock as in the case of the Russia-Ukraine crisis.”

“Lower intensity should also taper calls for hikes as soon as the April meetings for both the ECB and the BoE. Meanwhile, we still find it hard to say that markets are ready to return to preconflict terminal pricing.”

“As far as central banks are concerned, we doubt that they will change their narrative that quickly based on a single news event. This is particularly the case given that the new baseline for oil prices has shifted dramatically, even if the intensity of war seems to have reduced.”

“TD still views any changes in rates from the ECB or the BoE as more likely to be an H2 story.”

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)