The landscape of the global oil market is changing significantly in just a few weeks, as major investment firms and analysts are revising their forecasts for crude oil prices in 2026 and 2027 downward. For the first time since the start of the military crisis with Iran, the mood is shifting, with fears of prolonged supply shortages subsiding following the gradual reopening of the Strait of Hormuz.

This shift marks the end of a five-month cycle of continuous upward revisions to oil price forecasts. The resumption of maritime shipments from the Persian Gulf, combined with signs of a slowdown in global demand, is now leading many analysts to conclude that the market is moving toward conditions of greater supply adequacy.

This shift was also reflected in price movements. Brent crude ended the second quarter of 2026 with its largest quarterly decline since the pandemic began in early 2020, having fallen by about 20% in June alone.

New Estimates from Investment Firms
The revision of forecasts is now widespread.

Morgan Stanley has lowered its 2027 price forecast for Brent by $5 per barrel. It now estimates that prices will hover around $75 in the first half of the year and around $70 in the second half.

The U.S. bank bases its forecast on the expectation of a significant increase in commercial oil inventories in OECD countries, while also forecasting that the global market will see a surplus of about 4.8 million barrels per day by 2027.

A similar picture emerges from the converging forecasts of economists and analysts regarding the trajectory of international prices.

Average estimates now place Brent at $84.50 per barrel for 2026, significantly lower than the previous forecast of $90.44. For U.S. WTI, the average forecast stands at $79.49 per barrel, compared to $84.63 estimated a month earlier.

The new forecasts imply a decline of more than 6% in just one month.

The End of the Geopolitical Premium
The shift in estimates is directly linked to the significant de-escalation of geopolitical tensions.

After the conflict began in late February, Brent had surged above $126 per barrel, as markets priced in severe disruptions to global supply.

However, the gradual restoration of shipping traffic through the Strait of Hormuz and the easing of fears of a prolonged blockade of the waterway led to a sharp de-escalation, with the price of Brent returning to near $73 by the end of June.

Now, several analysts estimate that most of the so-called geopolitical risk premium has already been priced out of oil prices.

Supply and demand are shifting the balance
In addition to the improvement in the geopolitical environment, analysts are also taking into account changes in the market’s fundamentals.

Once flows through the Strait of Hormuz return fully to normal, the market is expected to return to a state of oversupply in the second half of 2026.

During the crisis, restrictions on transit through the Strait of Hormuz affected nearly one-fifth of global oil supply, leading to a rapid decline in inventories and creating conditions of a shortage.

The latest estimates, however, suggest that the market will shift from a deficit of approximately 2 million barrels per day in 2026 to a small surplus in the last quarter of the year, provided that production in the Gulf countries recovers almost fully.

OPEC+, China, and Oversupply
The stance of major producers also remains a key factor in price trends.

The prevailing view is that OPEC+ will continue to gradually increase its production, seeking to regain market share without putting excessive pressure on prices.

At the same time, the outlook for demand remains subdued.

Analysts estimate that global oil consumption will grow at a significantly slower pace in 2026, as weaker economic activity and reduced consumption in China continue to affect the world’s largest crude oil import market.

Accordingly, OPEC has successively scaled back its forecasts for demand growth, lowering its estimates from approximately 1.4 million barrels per day at the beginning of the year to levels below 1 million barrels per day.

At the same time, the International Energy Agency forecasts that by 2027 the global market will enter a period of significant oversupply, as production is estimated to increase by approximately 8 million barrels per day, while demand will rise by only about 2 million.

Despite the general trend toward de-escalation, there is no shortage of more optimistic estimates regarding demand. Some analysts believe that lower prices will boost consumption, while noting that the increasing strategic stockpiling of oil by several countries could provide additional support to the market in the coming years.

Source: newmoney.gr