DUBAI (Realist English). The global oil market is once again in turmoil. On 29 July, Brent crude on ICE Futures surpassed $90 per barrel, reaching $90.72 by the evening, a gain of 7.88%. WTI rose to $84.87 (+7.08%).
The price surge was fuelled by renewed military action in the Middle East: US and Saudi airstrikes against Iran‑backed militias in Iraq, as well as attacks by the Islamic Revolutionary Guard Corps (IRGC) on three oil tankers in the Strait of Hormuz.
“Fresh military actions and Iranian statements about their intention to control shipping through the Strait of Hormuz are once again supporting oil prices,” noted UBS analyst Giovanni Staunovo.
Price rollercoaster: from $137 to $73 and back
2026 has become one of the most volatile years in oil market history. In early April, at the peak of the Middle East conflict, Brent reached $137 a barrel. However, on 17 June, after the signing of a memorandum of understanding between the US and Iran, prices collapsed – by 1 July Brent was trading at $73.
In June, Brent averaged $85, which is $22 below May’s level and $32 below April’s peak. But already in July, quotes began to rise again. By 17 July, Brent was trading at $88.1, WTI at $82.5.
Three key drivers of the market
1. Strait of Hormuz – the main flashpoint
The Strait of Hormuz, through which about 20% of the world’s oil passes, remains the epicentre of uncertainty. After a short‑lived US‑Iran agreement, transit partially recovered: by the end of June, oil and condensate shipments reached 13.2 million barrels per day, recovering more than 70%.
However, the escalation in early July once again all but halted shipping. According to the International Energy Agency (IEA), the restoration of transit will depend solely on de‑escalation and improved security in the strait.
2. Red Sea and Suez Canal under threat
Besides Hormuz, two other key routes are under threat – the Bab el‑Mandeb Strait and the Suez Canal. According to Goldman Sachs estimates, over the past 30 days about 900,000 barrels of crude passed through Bab el‑Mandeb daily, of which roughly 400,000 have no alternative routes. A simultaneous blockade of all three routes would create a “hard deficit” of global supply.
3. OPEC+ production cuts
From August, seven OPEC+ countries (Russia, Saudi Arabia, Iraq, Kuwait, Kazakhstan, Algeria and Oman) are increasing their permitted production by 188,000 barrels per day. However, it is expected that after September, OPEC+ will suspend further increases, maintaining current levels until a new quota mechanism is introduced in early 2027.
Supply and demand balance: deficit to turn into surplus?
Forecasts from key institutions on market balance diverge dramatically.
The IEA expects global oil supply to fall by 3.7 million bpd in 2026 – to 102.6 million bpd. At the same time, in 2027, as Middle East transit recovers, supply could rise to 110.1 million bpd.
Demand, according to the IEA, will decline by 1.05 million bpd in 2026 – to 103.463 million bpd. In 2027, growth of 2.06 million bpd is expected – to 105.469 million bpd.
OPEC, by contrast, in July again lowered its forecast for demand growth in 2026 – to 0.8 million bpd. However, for 2027 the cartel raised its forecast to 1.94 million bpd.
The US Energy Information Administration (EIA) forecasts that global oil inventories will fall by 2.2 million bpd in the third quarter of 2026 (compared to more than 7 million bpd in the June forecast), and that the market will return to a state of surplus in 2027.
Price forecasts: from $60 to $120+
The wide range of forecasts from leading analytical houses reflects the extreme uncertainty surrounding geopolitics.
Goldman Sachs outlines three scenarios:
- Baseline (neutral) – assuming de‑escalation and restoration of shipping: Brent in Q4 2026 – $80/bbl, in 2027 – $75/bbl. WTI – $76 and $70 respectively.
- Extreme (upside) – if the Hormuz blockade continues into 2027: Brent in Q4 2026 will exceed $120/bbl, with an average price of $100/bbl in 2027. A simultaneous blockade of Bab el‑Mandeb and the Suez would add another +$25/bbl.
- Lower bound – with excess supply and falling demand, Brent could drop to $60/bbl by the end of 2027, but the probability of this scenario is assessed as low.
S&P Global Ratings maintains its forecast: Brent – $110/bbl through the end of 2026, $80/bbl in 2027.
EIA – the most pessimistic forecast: Brent in 2026 at an average of $81.91/bbl, WTI – $76.26/bbl. In the third quarter of 2026, Brent, according to the agency, will average $74/bbl, and in 2027 will fall to $65.
Fitch Ratings raised its forecast: Brent in 2026 – $87/bbl (previously $70), WTI – $80 (previously $65).
The IMF in its July bulletin raised its estimated average price for the Brent, Dubai and WTI basket for 2026 to $89/bbl. Analysts at Freedom Global expect Brent in 2026 in the range of **$80–90/bbl, Urals – $70–75.
The Russian factor: Urals holds at a discount
For Russia, high oil prices support export revenues and the budget. However, the IMF maintained its forecast for Russia’s GDP growth in 2026–2027 at 1.1% – high oil prices do not compensate for sanctions restrictions, the high key rate and cooling domestic demand.
Urals, according to estimates, will trade at a discount to Brent of $10–15/bbl, i.e. in the region of $70–75 if current prices hold. The IEA lowered its forecast for Russian production by 85,000 bpd in 2026 and by 150,000 in 2027.
The key question for the coming months is the fate of the Strait of Hormuz. If the US and Iran return to negotiations, prices could stabilise in the $75-85 range. If escalation continues – Brent risks moving above $100, and in an extreme scenario – towards $120 and beyond.
As Goldman Sachs notes, global inventories are at their lowest level since the beginning of the year: from March to July they fell by 4.09 billion barrels.
“Inventories are lower, and the market’s sensitivity to any supply disruptions is higher. Any new disruption to shipping will immediately be reflected in prices,” analysts concluded.
The oil market is frozen in anticipation: peace or war in the Strait of Hormuz will determine whether we see triple‑digit oil prices or a return to $60 a barrel.
