Deutsche Bank’s Jim Reid and colleagues outline a baseline scenario in which a US-Iran agreement this month reopens the Strait of Hormuz, allowing Brent Oil to retreat toward $86 per barrel in Q4 2026. They warn that a prolonged closure could push Brent towards $150, with stagflationary risks and recession in Europe, though global GDP is only slightly trimmed.

Hormuz scenarios drive crude outlook

"In the outlook, our baseline expectation is that a US-Iran deal is reached this month that allows shipping through the Strait of Hormuz to resume, with Brent crude falling back to $86/bbl in Q4."

"However, if the Strait of Hormuz experiences a prolonged closure, that would push Brent towards $150/bbl, hitting global growth and pushing Europe into recession."

"The resulting increased caution in oil markets saw Brent crude jumping to as high as $97.79bbl following the Tasnim report before settling at $94.98/bbl."

"When adjusting for the roll in the monthly benchmark from July to August, this marked the biggest daily jump for the front-end contract (+4.24%) in four weeks."

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