Morgan Stanley cut its short-term oil price forecasts in a June 15 report after a tentative U.S.-Iran agreement to reopen the Strait of Hormuz. The bank now expects Brent crude to average $90 per barrel in Q3 2026, down from $100, and $80 per barrel in Q4 2026, a reduction of $15 from its previous forecast.
The bank said Middle East oil production is likely to recover faster than expected, with the timeline moving forward by one to two weeks. Output is now expected to begin recovering from mid-July, reach around 50% of normal levels by September, 80% by December, and fully recover by early 2027. However, analysts noted that several risks and uncertainties remain.
Goldman Sachs also lowered its oil forecasts after President Trump announced a preliminary deal that would end the U.S. blockade and reopen the Strait of Hormuz once formally signed on Friday. Goldman now expects Persian Gulf oil exports to return to pre-conflict levels by the end of July, compared with its earlier expectation of the end of August.
As a result, Goldman reduced its Brent crude forecast for Q4 2026 to $80 per barrel from $90 and lowered its 2027 average Brent forecast to $75 per barrel from $80. The bank also expects WTI crude to average $75 per barrel in Q4 2026 and $70 per barrel in 2027.
Meanwhile, the U.S. Strategic Petroleum Reserve (SPR) has fallen to about 340 million barrels, its lowest level since 1983, after the Trump administration moved toward completing a 172 million-barrel oil release aimed at easing fuel prices during the Iran conflict. Once completed, the reserve would drop to roughly 243 million barrels, about one-third of its total capacity, reducing the U.S.’s ability to respond to future supply disruptions.
JP Morgan Asset Management strategist Karen Ward said falling oil prices could support global stock markets. She believes oil could drop to $70 per barrel in the coming weeks as the U.S.-Iran agreement progresses. Ward added that increased supply from Iran, weaker OPEC discipline, and higher Gulf production could boost equities and potentially encourage central banks to cut interest rates. She also said the market rotation that stalled on February 27 due to the Iran conflict is beginning to return as concerns ease.
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