Iran deal won’t solve oil supply issues overnight. Barclays keeps $100 forecast
The Strait of Hormuz is expected to reopen Friday after a peace deal is signed by the U.S. and Iran in Geneva, but the war’s impact on oil supplies could last longer than prices suggest, according to Barclays. The firm is maintaining its 2026 oil price forecast at $100 per barrel for Brent, even as the global benchmark tumbles below $80 per barrel for the first time since March. The U.S. and Iran announced Sunday that they had reached a memorandum of understanding to end the war. But even if it is finalized this week, analyst Amarpreet Singh said restoring normal trade flows through the Strait of Hormuz could take weeks. “The Strait of Hormuz blockades might soon be in the rearview mirror, but the effect on oil market fundamentals will not be clear for at least a few more weeks and could prove stickier than market participants currently expect,” Singh wrote in a note. Rerouting shipping, clearing logistical bottlenecks and restarting production will take time and the risk of renewed flare-ups and further supply disruptions remains non-trivial, according to the bank. “Around 60% of oil demand is tied to the production and movement of goods. While a gradual easing toward $80/b Brent by end-2027 appears plausible, we see near-term risks to prices as skewed to the upside,” the bank said in its note. However, analysts at Citi believe trade flows through the critical waterway will resume quicker than previously anticipated. “In our view, the market is pricing the [ memorandum of understanding ] itself, but not the agreement that secures [the Strait of Hormuz] flows over the medium term,” according to Citi’s note. Otherwise crude oil would likely be another $10 to $15 per barrel lower, the analysts said. Citi expects flows through the strait to normalize by mid-to-late July, and cut its Brent forecasts to $75 per barrel for the third quarter, $70 for the fourth quarter and $65 for 2027. That was down from forecasts of $110, $90, and $80 per barrel, respectively. The bank further recommends selling any summer rallies in oil based on limited appetite for renewed conflict from the U.S. and Iran signaling willingness to deal. According to Citi, now that the conflict is settled the focus for the oil market returns to weak underlying conditions, including a potential surplus by next year. Goldman Sachs and Morgan Stanley have both lowered their expectations for the fourth quarter to $80 a barrel and expect the trade flow to resume sooner than expected Goldman Sachs reduced its Brent forecast for the fourth quarter to $80 per barrel from its previous estimate of $90 a barrel. For 2027, it estimates prices of $75 a barrel, down from $80. The investment bank estimates Persian Gulf exports will normalize to prewar levels by the end of July instead of the end of August as previously estimated. Morgan Stanley also sees tight supplies this summer. From the fourth quarter onwards, it estimates Brent around $80 per barrel and expects the tanker flow could take several weeks to be restored, with 50% of lost production back by September and 80% restored by December. “Despite the disruption, a broad range of indicators has signaled weakness in physical oil markets in recent weeks; notably, unsold cargos are above-average,” the analysts said.
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