Brent crude prices could fall to US$70 per barrel by the fourth quarter of 2027 as the global oil market remains well supplied, even after the disruption caused by the Strait of Hormuz crisis, according to Wood Mackenzie.
In a June 22 market update, the consultancy said its latest outlook assumes transit flows through the Strait normalize in August, allowing supply to gradually recover and market balances to ease over the next 18 months.
The firm expects to see Brent averaging US$92/bbl in 2026, buoyed by the elevated prices of March through May, and US$78/bbl in 2027.
“Even if demand bounces back towards our forecast 105 million b/d next year, the market should be well-supplied. Brent may slip to US$70/bbl by Q4 2027,” the Wood Mackenzie analysis said.
WoodMac foresees US$200 Brent by end-2026 if Hormuz disruption persists beyond September | OilNOW
The forecast follows a sharp swing in oil prices after the signing of a memorandum of understanding between the United States and Iran, which raised hopes that the Strait of Hormuz could reopen and avoid a prolonged supply shock. Wood Mackenzie said the possibility of a reopening quickly reversed the market’s earlier fear of a worst-case outcome.
According to the report, Brent’s recent drop was not driven by an immediate increase in physical oil flows through the Strait, but rather by a rapid shift in market sentiment. It noted that investor positioning for higher Brent prices fell by around 80% in the four weeks to June 16 after reaching a five-year high during the crisis.
“It will take months. The first critical step is for shipowners and crews – as well as insurers – to be assured of safe passage through the Strait… Our Vessel Tracker analysis suggests that ships of all categories passing through has increased from the low teens per day to a peak of 35 on 18 June, promising but still well short of pre-war numbers,” the report said.
Wood Mackenzie estimates that about 60 million barrels of oil currently trapped on vessels in the Gulf could quickly reach consumer markets after the reopening.
The report said the Gulf’s wider oil supply chain, from production to exports, will take longer to fully recover. Based on its earlier analysis, Wood Mackenzie expects around 70% of the more than 11 million barrels per day of shut-in production to return within three months of reopening, with 90% restored within six months. The final one million barrels per day could take considerably longer to return.
This recovery, however, depends on regional stability. While the Strait of Hormuz remains open to commercial shipping, security remains fragile. According to a June 26 Reuters report, Iran has renewed its dispute with the United States and Gulf states over authority and navigation in the strategic waterway, insisting it has a central role in managing transit through the strait. Separately, tensions between Iran and Israel persist over the broader ceasefire, with disagreements over its terms and Israel continuing military operations in southern Lebanon.
