Macquarie has drastically cut its Brent crude price forecasts, anticipating a swift recovery of oil flows through the Strait of Hormuz. The bank now projects Brent to trade at $80 per barrel in the third quarter of 2026, a substantial reduction from its previous estimate of $95. For the fourth quarter of 2026, the forecast has been lowered to $75 per barrel from $90. The first quarter of 2027 sees an even sharper reduction, with Macquarie predicting $70 per barrel, down from an earlier $85. These revised figures reflect a significant shift in market outlook following the interim peace deal and the reopening of the crucial shipping lane.
The investment bank's revised forecast is primarily driven by the unexpected speed at which Middle Eastern oil is returning to the market. The reopening of the Strait of Hormuz has allowed a surge of Iranian crude, with sellers offering steeper discounts to entice buyers, particularly in China. Spot cargoes of Iranian Light crude for July arrival are being offered at a discount of $2.50 to $5 a barrel to Brent benchmark prices, compared to approximately $1 before the deal. This influx of supply, combined with increased output from countries like Iraq, which has boosted production from its southern oilfields to around 2.1 million barrels per day, is creating a supply glut.
Key indicators in the North Sea crude market are already showing weakness due to this increased supply. Forties crude, a critical component of the global Dated Brent benchmark, recently traded at its lowest level in two years. Similarly, WTI Midland, another key component, fell to a three-month low. These declines underscore Macquarie's view that the market will be adequately supplied, further pressuring prices. The bank's updated outlook aligns with other analysts, such as Rabobank, which also cut its oil price forecasts, now seeing Brent at $79 a barrel in the third quarter and $78 in the fourth quarter.
