Oil prices fell to four-month lows after a US-Iran deal reduced concerns about disruptions in the Strait of Hormuz. The development eased geopolitical tensions and improved confidence in the stability of global energy supplies and trade routes.
Wood Mackenzie now expects Brent to average $78 per barrel in 2027, with prices potentially easing further to $70 by the fourth quarter, reflecting a shift in sentiment following a US-Iran Memorandum of Understanding that points to a phased reopening of the Strait.
Brent crude fell $1.37, or 1.8 per cent, to $75.71 a barrel by 0805 GMT on Tuesday, touching its weakest level since February 27, Reuters data showed. US West Texas Intermediate slipped $1.08, or 1.5 per cent, to $72.13, also hitting multi-month lows as supply flows show signs of recovery.
Crude oil prices have retreated more than 36% from the nearly $ 120-per-barrel highs reached during the peak of the recent US-Iran war in the Middle East earlier this year. The market has also come under pressure after Washington granted Tehran a 60-day sanctions waiver following the initial round of peace talks, allowing Iran to resume oil exports. Easing hostilities in Lebanon has further reduced concerns over supply disruptions.
Given the reduction in geopolitical tensions and supply worries, the oil market is gradually reverting to an environment that’s fundamentally driven. Although the additional oil exportation from Iran and increased production from OPEC+ nations will likely put further downward pressure on prices, analysts are confident that robust global demand will prevent any further collapse.
Julius Baer analysts said that the market turnaround has been unusually swift, with exports already rebounding to more than 80 per cent of pre-crisis levels. That shift suggests the market may have already moved from deficit into surplus.
“Emptied storage could sooner than expected begin to refill. This process takes time and should lend some support to prices, before the storage surplus likely returns next year. The past weeks’ sell-off largely came from a swift shift in the market mood from bullish to bearish, which anticipates these normalisation trends in parts. We stick to our cautious view, maintain our short position, and trim our 3-month forecast to $70,” said Norbert Rücker, Head of Economics and Next Generation Research, Julius Baer.
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Prices had been elevated earlier in the year, with Brent averaging $92 per barrel in the first half of 2026. However, investor positioning for higher prices has since collapsed, falling by about 80 per cent from a five-year high in the four weeks to June 16.
Prices of oil would continue to be determined based on geopolitics, changes in global demand, and the production policies of big producers. Although easing relations between the USA and Iran have diminished fears about supplies, price fluctuations might continue due to investors' considerations of economic growth and energy use.