(The opinions expressed here are those of the author, a columnist for Reuters.)

ORLANDO, Florida - U.S. companies face structurally higher oil prices this year even if the Iran war ends soon, meaning investors may need to rethink those sunny 2026 corporate earnings forecasts.

Heading into the year, ​the consensus 2026 outlook for oil was fairly ⁠bearish, while the earnings forecasts for Wall Street were pretty optimistic.

The latter hasn't changed. As of Friday, full-year 2026 earnings growth estimates, according to LSEG data, were nearly 16%, up from ‌14% last year and 12% the year before.

However, those rosy outlooks assume an average oil price this year close to $60 per barrel – an expectation that disappeared into thin air with the U.S.-Israeli strikes on Iran on February 28 ​and subsequent supply disruption.

Oil market volatility has been wild. Crude recorded its biggest weekly rise on record last week, and rose further to almost $120 a barrel this week before plunging on hopes for a swift end to the ​conflict.

While ​oil will likely drift lower when the war eventually subsides, the damage is done. The finely tuned global energy system has been upended, infrastructure has been hit and the expected supply glut has evaporated.

Average oil prices this year will almost certainly be much higher than businesses were budgeting for on January 1. Companies will absorb part of that increase, and consumers ⁠will certainly feel the pinch. Either way, corporate earnings will be squeezed.

RIP UP THE FORECASTS

In a Reuters poll in December, the consensus average 2026 forecast for Brent crude was $61.27 a barrel, with oversupply expected to offset possible supply disruption from the brewing U.S.-Iran tensions. That would have represented a 7% decline from the 2025 average of $68.20.

These forecasts have since been torn up.

Analysts at HSBC on Tuesday raised their average 2026 Brent forecast to $80 from $65 and their U.S. West Texas Intermediate crude outlook to $76 from $61. These are increases of 23% and 25%, respectively.

Also on Tuesday, the U.S. Energy Information Administration upped its average 2026 Brent crude ​forecast to $79 from $58 last month. That's a ‌36% increase.

Few sectors of ⁠the economy will escape the impact ⁠of energy price hikes like that. Gasoline, jet fuel, fertilizer, petrochemicals and plastics will all be more expensive, with pain felt in industries as diverse as transportation, manufacturing, metals, retail and food.

"As prices rise, consumption is affected, ​and, ultimately, corporate earnings erode," says Joe Brusuelas, chief economist at RSM US LLP.

IT'S A GAS, GAS, GAS

Equity strategists at Goldman Sachs reckon the direct ‌impact of "modestly" higher oil prices on S&P 500 earnings should be fairly muted, but an extended period of supply disruption or uncertainty ⁠poses much greater risk to economic activity. For every one percentage point decline in real U.S. GDP growth, S&P 500 earnings per share could fall 3-4%, they posit.

Other estimates suggest a 30% rise in oil prices could knock as much as 4% off S&P 500 earnings, with the pain felt most acutely in transportation, industrial, and consumer discretionary.

Consumer spending accounts for around 70% of U.S. economic activity. Sharply higher energy costs will squeeze household budgets, and spending elsewhere will suffer.

Alarm bells are already ringing. Average U.S. gasoline prices are now over $3.50 a gallon, according to American Automobile Association data. That's up 17% from before the war started.

There's a flip side, of course. Sustained higher oil prices boost energy sector profits, and double-digit earnings growth for the sector is not out of the question. But energy only accounts for 4–5% of total S&P 500 earnings and thus is unlikely to offset the hit to margins elsewhere.

AI ARMS RACE EVEN MORE EXPENSIVE NOW

Within current 2026 earnings growth forecasts, there is incredibly wide dispersion among the 11 sectors.

As of Friday, the energy sector EPS had sunk to minus 1.2%, by far the gloomiest forecast and the only one pointing to declining profits.

At ‌the other end of the scale, tech's 2026 EPS growth estimate was 35.9%, comfortably the highest among all sectors and ⁠up from 30.8% on January 1. Tech has contributed the lion's share of the S&P 500's earnings growth in recent years.

But ​higher energy prices are a blow for the mega-cap firms leading the artificial intelligence arms race. UBS analysts estimate capex spending by the "hyperscalers" this year will hit $770 billion. The construction and running of those data centers could now get a lot more expensive.

Investors were already nervous about the future returns on these outlays. Significantly more expensive energy will only deepen their fears at a time when risks to many other sectors are growing too.

(The ​opinions expressed here are those ‌of Jamie McGeever, a columnist for Reuters)

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(By Jamie McGeever; Editing by Marguerita Choy)