President Donald Trump announced on Sunday that a peace deal with the Islamic Republic of Iran is complete, instructing global tankers to prepare for renewed movement through the Strait of Hormuz. In response, Goldman Sachs revised its crude oil price forecasts downward, anticipating a faster normalization of Persian Gulf exports. The bank now projects Brent crude will average $80 a barrel in the fourth quarter of 2026, a reduction from its previous estimate of $90, and $75 across 2027, down from $80. Its forecast for West Texas Intermediate was cut to $75 for the fourth quarter of 2026 and $70 for 2027.

Accelerated Supply Recovery

Goldman Sachs has adjusted its model to reflect Persian Gulf exports returning to pre-war levels by the end of July, rather than the end of August. This one-month acceleration in the supply recovery reduces the fair value of crude by about $10 for the fourth quarter and $5 for 2027. The bank emphasized that oil prices track inventories with a near-linear relationship, meaning a faster return of supply drains the war premium more rapidly, even if the physical flow of barrels has not yet fully materialized.

Current estimates indicate that flows from Persian Gulf countries have increased from less than 30% of normal levels in early March to nearly 50% in mid-June. Volumes through the Strait of Hormuz have risen to approximately 11 million barrels a day. Achieving pre-war levels requires an additional 12 million barrels passing through the chokepoint, which would restore throughput to 70% of pre-war capacity. Goldman noted that capacity is not the bottleneck, estimating that empty tankers within the strait or five days of navigation can load 860 million barrels, sufficient for over 40 days of normal exports.

Price Risks and Market Outlook

Goldman Sachs analyst Daan Struyven characterized the outlook as carrying "two-sided but still net upside price risks." In a bullish scenario where the Strait of Hormuz remains disrupted and Gulf exports recover slowly, Brent could climb above $130 in late 2026 and average $105 in 2027. Conversely, a bearish scenario driven by faster supply growth and persistent demand losses could see Brent average just under $70 in the fourth quarter and just under $60 in 2027.

Struyven cautioned that the recovery remains fragile, highlighting the possibility that Iran could effectively close the Strait again even after re-opening, particularly if detailed nuclear negotiations fail. The bank noted that the 14 million-barrel-per-day reduction in Middle East liquids production represents the sharpest oil supply shock on record. However, the second-quarter global deficit is tracking at a smaller 5 million barrels per day due to flexible demand, notably from China. Looking ahead, Goldman expects a large surplus of 3.2 million barrels per day in 2027 but forecasts resilient prices supported by a structural global stockpiling trend exceeding 1 million barrels per day and a security premium.

Market Reaction

The revised forecast coincided with a decline in crude prices on Tuesday. Brent fell approximately 4% to trade near $80 a barrel, while West Texas Intermediate dropped to $77, marking the lowest levels for both benchmarks in over three months. Trump stated over the weekend that oil "will flow" through the Strait of Hormuz once the deal is signed on Friday. Oil-tracking funds reflected the market pressure, with the United States Oil Fund LP (NYSE: USO) and the United States Brent Oil Fund LP (NYSE: BNO) both moving lower. The Energy Select Sector SPDR Fund (NYSE: XLE) was the worst-performing sector on Monday, falling 3.5%, and declined an additional 0.8% during Tuesday's premarket trading.

Russia is shipping oil at a near-record pace as Kyiv targets its refineries with drones, according to a report by Bloomberg. The increased export activity highlights the resilience of Russian energy logistics despite sustained attacks on its domestic refining infrastructure. The conflict continues to influence global oil supply dynamics significantly.

Impact on Refineries

Ukrainian forces have increasingly relied on drone strikes to disrupt Russian energy capabilities. These attacks have specifically targeted refineries, aiming to degrade the country's ability to process crude oil domestically. The strategy appears to have shifted the focus toward exporting raw crude rather than refining it locally.

Export Dynamics

The near-record pace of shipments suggests that Russia is successfully navigating sanctions and finding alternative routes or buyers for its crude. This development underscores the complex interplay between military actions and economic adaptations in the energy sector. Market observers are closely monitoring these trends to assess long-term implications for global oil prices and supply chains.