Brent crude oil futures may fall to around $80 per barrel by the end of 2026 if the Strait of Hormuz remains open, according to a report from Commonwealth Bank of Australia analyst Vivek Dhar, after Iran and the U.S. agreed on an interim peace deal that opens the possibility of resuming oil shipments through the key waterway.
Dhar’s forecast is contingent on the Strait of Hormuz not being closed again, the analyst wrote in a research note circulated on Sunday. “Our forecast implicitly assumes that oil and refined product exports can resume quickly through the Strait of Hormuz,” Dhar said. The U.S. and Iran announced a peace deal on Sunday, which analysts said could restore crude flows through the chokepoint through which about one-fifth of the world’s oil is normally transported.
The analyst said that returning the oil market to pre-war oversupply expectations does not require a full reopening. “It’s worth noting that oil flows through the Strait of Hormuz just needs to reach 60%–70% of pre-war levels to return oil markets to pre-war oversupply expectations given the oil pipeline bypasses to the strait and non-OPEC+ supply growth this year,” Dhar added.
Oil prices fell on Sunday in New York and London trading. Front-month Brent crude futures slid 3.9% to $83.90 a barrel, while front-month West Texas Intermediate crude oil futures dropped 4.5% to $81.07 a barrel. The decline came as traders priced in the likelihood of the Strait of Hormuz, which Iran had effectively closed earlier in the year, reopening to commercial shipping.
XS.com senior market analyst Antonio Di Giacomo said in an email that a full restoration of flows through the corridor “significantly reduces fears of supply shortages and improves the outlook for stability in global energy markets.”