Oil markets have seen a recent selloff, with Brent crude falling below $100 a barrel and WTI posting its sharpest fall since April 2020. This was driven by early optimism surrounding a two-week ceasefire between the U.S. and Iran, which was initially expected to facilitate the reopening of the Strait of Hormuz. Goldman Sachs, for example, lowered its second-quarter 2026 forecasts for Brent and U.S. crude to $90 and $87 a barrel, respectively, after the ceasefire announcement. However, this optimism has been short-lived as shipping disruptions continue to plague key waterways, creating renewed uncertainty.
Shipping through the Bab el-Mandeb strait in the Red Sea saw a significant reduction on Sunday, with only eleven commodity vessels passing through, marking the lowest level in months. This disruption followed Houthi attacks on Saudi oil installations along the Red Sea coast, including strikes on Aramco sites in Jizan and Yanbu. Several large crude carriers (VLCCs) carrying Saudi and Russian crude for China and Pakistan were forced to reroute or delay transit. Similarly, traffic through the Strait of Hormuz remained low over the weekend, with some shipowners becoming increasingly wary of transiting the region due to ongoing attacks.
Despite the initial hopes for a sustained ceasefire and a full reopening of the Strait of Hormuz, the geopolitical risks in the Middle East persist. Analysts believe that the prospects for a meaningful reopening of the Strait of Hormuz in the near future remain low, as uncertainty surrounds the durability of the ceasefire. Goldman Sachs, while lowering short-term forecasts, has kept its third-quarter forecast for Brent at $82 a barrel and WTI at $77, and fourth-quarter projections at $80 for Brent and $75 for WTI, suggesting a rebound in prices. Concerns remain that supply from the key Middle East producing region may not fully recover, leading to a rebound in oil prices, with Brent crude futures gaining $2.70 to $97.45 a barrel and U.S. West Texas Intermediate crude advancing $3.55 to $97.96 a barrel on Thursday.
