In a significant shift driven by geopolitical developments, both Morgan Stanley and Goldman Sachs have lowered their oil price forecasts for the remainder of 2026 and into 2027. This adjustment comes in the wake of recent peace negotiations between the United States and Iran, raising expectations for the reopening of the crucial Strait of Hormuz.
Morgan Stanley has revised its projections, predicting that Brent crude will average $80 per barrel in the last quarter of 2026 and rise to $90 per barrel in the third quarter. Previously, the firm had forecast an average of $100 per barrel for the third quarter. Analysts from Morgan Stanley noted that while much of the situation remains fluid and negotiations are ongoing, the current developments signal a possible de-escalation of tensions that could lead to increased oil exports through the Strait of Hormuz. They expressed optimism about a swift recovery in tanker flows once the strait is reopened.
In parallel, Goldman Sachs has also adjusted its predictions, reducing its fourth-quarter forecast for Brent crude from $90 per barrel to $80 per barrel. For 2027, Goldman’s average forecast has been cut to $75 per barrel from an earlier estimate of $80. According to the bank’s commodity analysts, they anticipate that tanker traffic in the Strait of Hormuz will fully recover by the end of July.
Citi has taken an even more cautious stance, slashing its oil price forecast to $75 per barrel for Brent in the third quarter and projecting a further decline to an average of $70 per barrel in the final quarter of this year. Looking ahead to 2027, Citi expects Brent prices to average just $65 per barrel, a significant drop from its previous forecast of $80.
Market sentiment has already begun to shift in response to these developments, with Brent crude dipping to its lowest level since early March following the announcement of a preliminary peace deal between Washington and Tehran. The deal, set to be finalized in Switzerland, is expected to facilitate the reopening of the Strait of Hormuz within 30 days, further influencing the dynamics of the oil market.
As of the latest trading, Brent crude fell below $90 per barrel, sitting at approximately $82.51, while West Texas Intermediate (WTI) was reported at $80.23 per barrel, reflecting the impact of the geopolitical landscape on oil prices.
