Analysts participating in a monthly survey have revised lower their average price forecasts for crude oil in 2026, marking the first downward adjustment since conflict in Iran began. The poll, which canvassed 31 economists and market analysts, found Brent crude projected to average $84.50 per barrel in 2026, down from $90.44 the previous month, while U.S. crude was seen averaging $79.49, versus Mays $84.63 view.
The latest changes amount to a decline of more than 6% from May estimates and follow five straight months of upward revisions. Those earlier increases were prompted by the outbreak of the Iran conflict at the end of February, which disrupted supply and pushed oil to multi-year highs. Since then, easing geopolitical tensions and the restoration of shipping flows through the Strait of Hormuz have reduced concerns about sustained interruptions to supplies.
Market benchmarks have retreated sharply from their peaks earlier in the year. Brent traded at levels above $126 per barrel at the high point, and U.S. West Texas Intermediate neared $120 per barrel, before slipping as the prospect of renewed Middle East flows diminished the geopolitical risk premium.
"The bulk of the geopolitical risk premium has already unwound," said Tobias Keller, an analyst at UniCredit, noting that both recovering Middle East production and softer demand are likely to limit further upward momentum in prices.
Forecasts from the poll indicate a gradual softening of Brent through late 2026 and into 2027. On average, respondents expect Brent to ease from roughly $84 in the third quarter of 2026 to about $79 in the fourth quarter, and then decline into the mid-$70s by mid-2027.
Supply dynamics are central to the revised outlook. Frank Schallenberger, head of commodity research at LBBW, said that if traffic through the Strait of Hormuz returns to normal, the market would likely move back into surplus, putting downward pressure on prices in the second half of 2026. During the period of heightened tension, closure of the strait had cut off nearly a fifth of global oil supplies, triggering a sharp drawdown in inventories and pushing the market into a deficit for 2026.
HSBCs Kim Fustier, head of European oil and gas research, offered a quantified view of the balance, saying their 2026 estimates show a market deficit of about 2 million barrels per day. Fustier added that, assuming Gulf production is restored to near-normal levels, the market could shift to a small surplus of around 1 million barrels per day in the fourth quarter of 2026.
Several poll respondents expect OPEC+ to continue increasing output, albeit at a measured pace. The producers are presumed to be balancing a desire to regain market share against the need to avoid triggering a steep price decline.
Looking further ahead, the International Energy Agencys initial assessment of 2027 indicates a potential for a substantial supply overhang, with global supply forecast to rise by 8 million barrels per day while demand is seen increasing by only 2 million barrels per day.
Demand trends are a significant part of analysts concerns. The poll suggests oil demand growth in 2026 could slow by roughly 1.0 to 2.0 million barrels per day, with weaker consumption in China singled out as a key driver of that softness. OPECs internal demand estimates for 2026 were steady at about 1.4 million barrels per day from February through April, then cut to around 1.2 million bpd in May and to below 1 million bpd in June.
Despite the downward revisions, some participants in the survey flagged a potential improvement in demand later on, driven by affordability. One respondent, citing Goldman Sachs, pointed to a structural trend toward global strategic stockpiling of more than 1 million barrels per day in 2027 as a possible source of support for markets.
Implications for markets and sectors
- Oil producers and energy exporters could face pressure on revenues if prices continue to soften in the second half of 2026 and into 2027.
- Refining and petrochemical sectors may see margin impacts tied to changing crude prices and inventory dynamics.
- Shipping and logistics markets are sensitive to the reopening of chokepoints such as the Strait of Hormuz, which affects freight flows and insurance costs.