Brent crude enters H2 2026 at approximately $94/bbl, having peaked at $126/bbl in late April during the Iran Strait of Hormuz crisis before collapsing to $71-73/bbl in early July following the US-Iran interim deal. Recent renewed geopolitical tension after stalled negotiations has pushed prices back above $90.
Every major bank slashed forecasts by $10-15/bbl in June after the US-Iran MOU. Goldman Sachs cut Q4 from $90 to $80/bbl, Citi reduced 2027 from $80 to $65/bbl, and Morgan Stanley lowered Q3 from $100 to $90/bbl. The EIA STEO (July 7) projects Brent averaging $82/bbl for full-year 2026, falling to $65/bbl in 2027.
The IEA OMR (June 2026) highlights a dramatic supply shock: global oil supply fell 3.9 mb/d to 102.4 mb/d in 2026, while demand declined 1.1 mb/d year-over-year. OECD government stocks drew 163 mb since the war started — the lowest since December 1990. The implied 2027 surplus of ~5 mb/d suggests a dramatic oversupply if supply fully recovers.
OPEC+ production data shows Saudi Arabia at 6.59 mb/d (vs 12.11 mb/d sustainable capacity), Iraq at 1.48 mb/d, and Kuwait at 0.64 mb/d. Total OPEC-8 supply sits at 11.70 mb/d vs 22.83 mb/d sustainable capacity. Gulf production was massively shut-in (~8-11 mb/d at peak) during the Hormuz closure, with most expected to return gradually through Q4 2026-Q1 2027.
Three scenarios dominate: Base case (55%) assumes Hormuz reopens with Brent easing to $80-90/bbl in H2; Bull case (25%) assumes prolongation with Brent at $100-120/bbl; Bear case assumes rapid normalization with Brent sliding to $60-65/bbl.
Brent crude buyers should hedge H2 requirements with call spreads at $85-100/bbl. The Iran deal creates downside risk, but renewed tensions keep a floor under prices. For European refiners, monitor the Brent-WTI spread — currently wide at $2-4/bbl — for sourcing optimization. Budget $70-85/bbl for 2027 assuming gradual supply recovery, with upside risk to $100+ if geopolitical tensions escalate.