Brent crude outlook 2026: Hormuz risks shape prices

Why oil markets are still trading the Strait of Hormuz

Oil prices have been swinging as traders weigh a fragile U.S.-Iran ceasefire against continuing supply-side risks. The market expectation, as reflected in analyst commentary, is that the conflict remains limited. But reduced tanker traffic and the possibility of supply interruptions are still providing support to crude prices. That tension between easing headline risk and stubborn operational constraints is now central to near-term pricing.

Where Brent and WTI were trading

Brent crude gained 85 cents, or 1.2%, to $12.84 per barrel, while U.S. West Texas Intermediate (WTI) rose 74 cents, or 1.1%, to $19.29 per barrel. In another snapshot from Monday, international benchmark Brent crude futures were $12.45 per barrel as of 8:42 a.m. ET. The same report referenced a wartime high of over $188 per barrel in late April, highlighting the size of the reversal from peak stress levels.

Ceasefire headlines vs shipping reality

Analysts said the market has largely priced in an easing of immediate geopolitical risks, but remains cautious because the ceasefire between Washington and Tehran is described as fragile. ANZ noted that even with an interim U.S.-Iran agreement reducing immediate risk, shipping companies remain cautious. That caution is slowing the return of crude exports to normal levels. Commodity strategists also warned that market pricing could be overly optimistic if it underestimates persistent supply-side challenges.

Strait of Hormuz traffic remains the key variable

A central concern is that shipping traffic through the Strait of Hormuz may not quickly return to pre-war levels, even after a pickup following the ceasefire agreement. Analysts argued Tehran could seek leverage over the chokepoint, keeping uncertainty elevated. Before the conflict disrupted flows, nearly 20% of global energy supplies passed through the strait. The report also said around 14 million barrels per day of oil, equal to roughly 14% of global supply, remain affected, including exports from Saudi Arabia, Iraq, the United Arab Emirates and Kuwait.

Forecasts are split: models, banks, and agencies

Trading Economics global macro models and analyst expectations projected Brent at $18.61 per barrel by the end of this quarter, and $18.24 in 12 months. Separately, Spanjer said his year-end target remains $10, arguing that additional supply could be absorbed by buyers rebuilding inventories. He also outlined a $15 to $15 range in 2027, and pointed to a return to a more backwardated structure once inventories are rebuilt.

Fitch Ratings, cited in an ANI report from New Delhi dated June 8, projected an average Brent price of $17 per barrel in 2026. Fitch’s base-case forecast assumed the Strait of Hormuz reopens around the end of July after an effective five-month closure. Under that base case, Fitch expected Brent to remain elevated at $100–$110 per barrel during May–July, before falling to $10 per barrel in August and around $10 per barrel from September onward.

Big-picture volatility: what recent moves show

One report described a sharp sell-off where Brent tumbled more than 4% to around $16.40 per barrel as investors reacted to optimism around a potential U.S.-Iran agreement. Another update described the opposite move: Brent rising almost 6% to $114.44 per barrel on Monday amid concerns linked to the Strait of Hormuz, before easing to $113.54 at 02:00 GMT on Tuesday.

Since the onset of the conflict in late February, Brent prices were described as rising over 50%, driven by an estimated daily shortfall of 14 million barrels. Analysts also flagged post-conflict frictions such as backlog of cargo waiting to be unloaded, damaged infrastructure, and mine-clearing in Iranian waters as reasons prices may stay elevated for longer.

Scenario analysis: what Citi outlined

Citi analysts outlined multiple scenarios and said oil prices may surge to $130 per barrel by late June if disruptions persist. In the most favourable scenario, they described a ceasefire extension allowing flows to gradually resume during May, with global crude and product inventories decreasing by approximately 900 million barrels. Under that scenario, Citi anticipated Brent averaging $15 per barrel in Q2, then $10 in Q3 and $15 in Q4.

They also warned that if disruptions extend for another month, total losses could rise to about 1 billion barrels, with Brent at $110 in Q2, then $10 in Q3 and $10 in Q4. In a worst-case scenario of disruptions lasting eight to nine weeks from April 20, losses could reach about 1.7 billion barrels, keeping crude around $130 per barrel until Q3 before dropping to $100 by year-end.

Key numbers at a glance

What it means for India-linked stocks and the energy chain

For India, the story matters because sustained volatility in crude can feed directly into refinery margins, input costs for oil marketing companies, and sentiment around upstream producers. The same set of reports framed the energy market as entering a volatile phase, with disruption risks reshaping the outlook for India’s oil producers and refiners. Even in scenarios where the strait gradually reopens, analysts said prices are unlikely to snap back to pre-conflict levels quickly, citing a six-to-eight-week lag before supply meaningfully normalises.

Market impact and what to watch next

The market is currently balancing two realities: easing immediate geopolitical risk on paper, and slower normalisation in physical shipping and export flows. That combination explains why the consensus is not a straight-line move lower, even after ceasefire developments. The next major pivot points in the cited forecasts include the timing of the Strait of Hormuz reopening, the pace of tanker traffic returning, and whether inventories are rebuilt as additional supply becomes available. ADNOC’s reported view that full flows may not return before Q1 or Q2 of 2027 also highlights how long the physical market could take to normalise.

Conclusion

Brent crude is being pulled between ceasefire-driven optimism and the practical constraints of shipping and supply restoration through the Strait of Hormuz. Near-term price direction will likely remain tied to confirmed changes in flows, reopening timelines, and inventory trends that analysts are monitoring closely.