Goldman, Morgan Stanley and Citi Cut Oil Price Forecasts After Hormuz Reopening Deal

New York | EcoPulse24

Major global investment banks have sharply lowered their oil price forecasts following the preliminary agreement between the United States and Iran to reopen the Strait of Hormuz and end the conflict that disrupted global energy markets over recent months.

The revised forecasts from Goldman Sachs, Morgan Stanley, and Citi reflect growing confidence that Gulf oil exports and shipping flows will gradually return to normal, reducing geopolitical risk premiums that had been embedded in crude prices since the outbreak of the conflict.

Goldman Sachs Sees Brent at $80

Goldman Sachs lowered its forecast for Brent crude in the fourth quarter of 2026 to $80 per barrel, down from a previous estimate of $90.

The bank also reduced its average Brent forecast for 2027 to $75 per barrel, compared with an earlier projection of $80.

Goldman expects Gulf oil exports to return to pre-war levels by the end of July, earlier than its previous estimate of late August.

For US crude, the bank projects West Texas Intermediate (WTI) to average $75 per barrel in the fourth quarter of 2026 and $70 per barrel in 2027.

Morgan Stanley Cuts Brent Forecast by $15

Morgan Stanley also reduced its outlook, lowering its fourth-quarter Brent forecast by $15 to $80 per barrel.

The bank cautioned that the normalization of tanker traffic may still take several weeks despite the agreement.

Morgan Stanley expects around 50% of disrupted oil production to return by September and approximately 80% by December, suggesting that full normalization of supply chains may occur gradually rather than immediately.

Citi Turns More Bearish on Oil

Citi adopted one of the more cautious oil outlooks among major banks.

The bank cut its average Brent forecast to $75 per barrel for the third quarter of 2026 and $70 per barrel for the fourth quarter.

For 2027, Citi reduced its Brent forecast even further to $65 per barrel, down significantly from its previous projection of $80.

Citi's base-case scenario, which it assigns a 60% probability, assumes the memorandum of understanding between Washington and Tehran is signed and commercial flows through the Strait of Hormuz return to near-normal conditions between mid- and late July.

Oil Falls to Multi-Month Lows

Oil markets have reacted swiftly to the changing geopolitical landscape.

Brent crude has fallen around 5%, reaching its lowest levels since March as investors unwind the conflict premium that had pushed prices sharply higher during the war.

The Strait of Hormuz remains one of the world's most strategically important energy corridors, carrying roughly one-fifth of global oil shipments and significant volumes of liquefied natural gas exports.

The prospect of uninterrupted flows through the waterway has dramatically altered market expectations for energy prices and inflation.

Citi Raises Precious Metals Targets

Despite lowering its oil outlook, Citi became more constructive on precious metals.

The bank raised its three-month forecast for gold to $4,500 per ounce, up from $4,000, and increased its silver target to $70 per ounce from $60.

Citi also maintained its expectation that gold could reach $5,000 per ounce within six to twelve months, while warning that market volatility is likely to remain elevated.

EcoPulse24 Analysis

The significance of these forecast revisions extends far beyond oil.

Only days ago, markets were pricing the possibility of prolonged supply disruptions, higher inflation, and additional monetary tightening.

Now, some of Wall Street's largest institutions are rapidly repositioning toward a fundamentally different scenario:

• Lower oil prices

• Easing inflation pressures

• Improved financial conditions

• Reduced risks to global growth

The speed of the revisions is particularly noteworthy.

Forecast changes of this magnitude by major investment banks typically occur over months, not days.

This suggests that institutions increasingly believe the reopening of the Strait of Hormuz could mark the beginning of a broader normalization process in global energy markets.

The implications are especially significant for energy-importing economies across Europe and Asia, where lower oil prices could ease inflationary pressures and improve household purchasing power and industrial profitability.

For the Gulf region, however, the picture is more nuanced.

While lower prices may moderate hydrocarbon revenues, the reopening of Hormuz removes one of the largest sources of uncertainty facing regional trade, energy exports, and financial markets.

Ultimately, what markets are beginning to price is not merely lower oil prices.

They are pricing the economic consequences of restored energy flows and a reduction in geopolitical risk.

And if the agreement holds, the most important story may not be that oil has fallen. It may be that the global economy has suddenly been handed a powerful disinflationary impulse.