UBS cut its dovish Brent forecast after indirect talks between the United States and Iran eased fears of further disruptions in the Strait of Hormuz, sending oil prices down for a third session in a row. Brent futures fell 0.9% to $70.91 a barrel on Thursday morning, while US West Texas Intermediate fell 0.9% to $67.99.
The market reaction followed meetings in Doha involving US and Iranian representatives in contact with regional mediators. Qatar said talks have progressed, although no final solution has been reached. The talks build on a cooperation agreement signed on June 18, which includes an end to military operations and freedom of navigation in the Strait of Hormuz.
Improved tank movements have begun to remove part of the country’s royalties that raised crude prices so early in the conflict. The Strait accounts for a large portion of the world’s petroleum trade, making any restrictions on shipping a direct threat to physical supply, commodity costs and energy prices. The renewed flow does not mean that conditions are fully normal, but it has reduced the likelihood of more disruptive market conditions.
UBS cut its average forecast for Brent for the third quarter of 2026 by $25 to around $80 a barrel and expects prices to remain around that level through the final quarter. Its median forecast for 2027 was cut by $10 to $75 as the bank factored stronger oil movements through the Straits and a lower risk premium into its forecast.
The revised forecast remains above current market prices, indicating that rebuilding inventories and restoring the Gulf supply chain will likely take time. The International Energy Agency expects global oil supplies to fall by an average of 3.9m barrels per day in 2026, despite a gradual recovery in Middle Eastern exports. It warned that demining, transport systems and operational constraints could delay a full return to pre-conflict flows.
HSBC took a relatively hawkish view on recovery, arguing that the Middle East’s return to supply could be offset by restocking once emergency withdrawals from strategic reserves have subsided. Its analysis shows Brent could recover to $80 a barrel, highlighting how lower-traded stocks can continue to support prices even if supply fears ease.
The inventory position creates an important difference between reduced geopolitical risk and an oversupplied market. IEA member countries agreed in March to release 400m barrels from emergency reserves after disruptions across the Middle East, the largest coordinated stockpile release in the organization’s history. Those barrels helped ease short-term pressure, but the IEA reported that global stocks continued to fall sharply amid the conflict.
OPEC+ production decisions will provide another impact on the price outlook for the second half. The seven participating countries agreed in May to increase June output by 188,000 barrels per day, while maintaining the flexibility to adjust supply as market conditions change. A rapid recovery in Gulf exports combined with increased OPEC+ production could put additional pressure on prices, especially if global demand remains weak.
The decline in the greenback provides relief for businesses exposed to transportation, manufacturing and energy costs, but the difference between current prices and bank forecasts shows that hedging decisions remain difficult. Companies closing fuel or commodity contracts must weigh the benefits of lower prices against the risk that negotiations fail, shipments are disrupted again or inventory rebuilds lead to renewed increases.
The financial impact of the Doha talks will therefore depend on whether the development of tank vehicles is permanent. Sustainable access through the Strait will reduce inflationary pressures and lower working capital requirements in all energy-intensive sectors. A breakdown in negotiations could quickly set back geopolitical costs, leaving oil markets sensitive to each diplomatic and security development.
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