ING’s Warren Patterson notes that Oil prices fell after the US–Iran Memorandum of Understanding allowed Persian Gulf supply to recover faster than expected, while demand lagged. He now forecasts Brent at $80/bbl in 3Q26, $74/bbl in 4Q26 and $70/bbl in 2027, but warns that renewed US–Iran tensions and uncertain Chinese buying could push Brent toward $100/bbl.

Brent outlook shaped by Gulf risks

"The oil market came under significant pressure following the Memorandum of Understanding between the US and Iran on 17 June. The deal allowed oil flows to recover at a much quicker pace than expected, which led to a weakening in the physical oil market. The return of Persian Gulf supply coincided with the continued release of oil from strategic reserves, along with demand recovering at a relatively slower pace than supply."

"We had originally anticipated that the normalisation of oil flows from the Persian Gulf would take much of the third quarter; it is possible that this normalisation could be achieved by the end of July. However, this is a very fluid situation, and this can certainly change depending on how recent events unfold."

"The quicker ramp-up has led us to revise our ICE Brent forecast lower for the remainder of the year. We're now expecting Brent to average $80/bbl in 3Q26 and $74/bbl in 4Q26. Meanwhile, for 2027, we forecast Brent to average $70/bbl."

"The key assumption behind these forecasts has been that there would be no further meaningful disruptions to flows through the Strait of Hormuz. This may be too optimistic, given the recent re-escalation. And in reality, we could see the market trading between our base case and our more aggressive scenario, where Brent tests $100/bbl in the third quarter."

"Our balance sheet still shows the market in a slight deficit in the third quarter of this year, before returning to a surplus in the fourth quarter and then a meaningful surplus in 2027. As a result, we do expect the market to find some support in the near term, once we have cleared the overhang of tankers that have been stranded in the Persian Gulf."

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