Wood Mackenzie expects oil prices to trend lower over the next 18 months as the reopening of the Strait of Hormuz and the recovery of disrupted crude production ease supply concerns, with Brent crude potentially falling to around $70 per barrel by late 2027.
The MoU, signed last week, created a framework for a comprehensive agreement to be negotiated over the next 60 days and raised hopes that the worst-case scenario for the global economy had been avoided, Wood Mackenzie said Monday.
According to its analysis, the market had relied heavily on inventory drawdowns to offset the loss of more than 11 million barrels per day (bpd) of crude production and around 3 million bpd of refining capacity linked to the Strait's closure.
Commercial inventories and strategic petroleum reserves were depleted at an accelerating pace, with US crude stocks at Cushing nearing operational minimum levels.
- Brent falls as reopening hopes grow
Wood Mackenzie said the recent decline in Brent prices reflected improving market sentiment rather than a significant increase in oil flows, with investor positions betting on higher prices falling by around 80% in the four weeks to June 16.
Brent could have exceeded $150 per barrel if the Strait had remained closed, but hopes of reopening eased supply concerns and lowered prices, the consultancy added.
Still, the market may take months to normalize, it stated. Vessel traffic through the Strait has risen to a peak of 35 ships per day, remaining below pre-conflict levels.
It expects crude demand to rebound once the Strait fully reopens, with about 70% of the more than 11 million bpd of shut-in production returning within three months and 90% within six months.
- Brent seen averaging $92 in 2026
Despite the possibility of short-term fluctuations, Wood Mackenzie expects Brent crude prices to trend lower over the next 18 months.
The consultancy forecasts Brent to average $92 per barrel in 2026, supported by elevated prices recorded between March and May, before easing to an average of $78 per barrel in 2027.
The forecast assumes that transit flows through the Strait of Hormuz will return to normal during August and that global oil demand will recover toward 105 million bpd next year.
Under these conditions, the market is expected to remain adequately supplied, with Brent potentially falling to around $70 per barrel by the fourth quarter of 2027.
By Humeyra Ayaz
Anadolu Agency
energy@aa.com.tr
