OCBC Group Research on Thursday reduced its quarterly Brent crude price forecasts for the period running through the second quarter of 2027, pointing to a rebound in tanker traffic through the Strait of Hormuz that has reintroduced the risk of oversupply into market pricing.
In its updated outlook, the bank now expects Brent to average $75 a barrel in both the third and fourth quarters of 2026 - a downward revision from earlier projections of $85 and $80 a barrel, respectively. For 2027, OCBC trimmed its first-quarter Brent forecast to $73 a barrel from $75, and its second-quarter forecast to $71 a barrel from $75.
OCBC strategists highlighted the restoration of flows through the strategic waterway as the principal driver of the change. "Shipping traffic - and thus oil flows - through the Strait of Hormuz has picked up following the U.S.-Iran memorandum of understanding," they wrote in a research note. "Expectations of normalized flows quickly pushed crude prices back to pre-conflict levels, reviving the oversupply narrative," they added.
Oil prices responded by slipping for a third consecutive session on Thursday, with both Brent and U.S. crude contracts retreating to four-month lows. By 06:54 GMT, Brent futures had fallen 1.1% to $70.80 a barrel, while U.S. West Texas Intermediate declined 1.5% to $67.58 a barrel. Both benchmarks had already fallen more than 1% in the previous trading session.
The latest declines followed comments from Qatar that Iran and the United States had made headway in indirect talks related to the strait, a corridor that carried roughly one-fifth of global oil supply before the conflict. A spokesperson for the Qatar Foreign Ministry said on X that the talks had produced "positive progress" on issues tied to the memorandum of understanding that ended the war in June, though the statement noted there was no indication the parties were closer to a lasting peace agreement.
Alongside the oil forecast revisions, OCBC also scaled back its outlook for precious metals this week. The bank lowered its end-2026 forecast for gold to $4,360 an ounce from $5,100, and cut its silver forecast to $67 an ounce from $89.50.
OCBC attributed the reductions in its metals forecasts to a combination of factors it said have weakened demand for non-yielding assets: a sharp repricing in real interest rates, renewed dollar strength and a more hawkish tilt in expectations for Federal Reserve policy. The bank emphasized that these adjustments reflect a more challenging near-term environment rather than a change in its longer-term bullish view on the metals complex.
In its updated path for precious metals, OCBC now anticipates gold to average $4,180 an ounce by September 2026 before rising to $4,820 an ounce by September 2027. For silver, the bank projects a move from an average of $64 an ounce to $74 an ounce over the same interval.
Market participants and industry observers will be watching whether continued normalization of shipping through the Strait of Hormuz sustains downward pressure on crude prices, and whether central bank expectations and dollar dynamics keep weighing on demand for gold and silver in the near term.