Goldman and Morgan Stanley have lowered their oil price forecasts. Should you bet on a drop in prices?

Wall Street’s largest banks are lowering their oil price forecasts for the coming quarters, according to Bloomberg. Optimism regarding the resumption of oil production in the Middle East is growing following the conclusion of a temporary agreement to reopen the Strait of Hormuz. However, a significant drop compared to current prices is not expected.

Goldman Sachs expects oil supplies to fully recover by the end of July and anticipates that the price of Brent crude will reach $80 per barrel in the fourth quarter, down from its previous forecast of $90, Bloomberg reported. This is roughly in line with the current price.

According to Morgan Stanley’s estimates, the price of Dated Brent—which serves as the benchmark for the physical market—will average $90 per barrel in the third quarter (down from the previous estimate of $100) and will fall to $80 in the final three months of the year. By comparison, in April, physical oil prices reached $147 per barrel.

“Much still needs to be worked out, and key risks remain, but at this point, this [agreement between the U.S. and Iran] is an important step toward de-escalating the conflict and increasing oil exports through the Strait of Hormuz,” Morgan Stanley analysts noted in a Bloomberg report.

According to Morgan Stanley, it will likely take “several weeks” to restore tanker traffic, as it will be necessary to clear sea mines, rebuild the confidence of shipowners and insurers, and bring back to the region vessels that had previously been redeployed.

“Furthermore, in order to restore production, export storage tanks must first be emptied, which means that the rate at which empty tankers enter the bay is perhaps even more important than the departure of loaded tankers. We expect 50% of lost production to be restored by September, 80% by December, and the remainder to follow in early 2027,” the bank’s analysts noted.

Goldman also expects a rapid resumption of shipments. “Although the full details of the agreement [between the U.S. and Iran] are unclear, we currently expect exports from the Persian Gulf to return to pre-war levels by the end of July,” the bank’s analysts noted.

On June 16, the price of July WTI crude oil futures fell by nearly 4% to $77.60 per barrel. August contracts for the benchmark Brent crude also fell by 3.7% and traded at $80.1 per barrel.

This article was AI-translated and verified by a human editor