“When commercial inventories decline, prices typically rise as market participants compete for an increasingly scarce supply in the physical market. But when the market rebalances due to weakening demand, the price reaction goes in the opposite direction,” the bank’s analysts write.
JPMorgan’s forecast for the average Brent price in the third quarter of 2026 is now $86 per barrel (previously $104 per barrel), and for the last three months of the year, $80 per barrel (previously $98 per barrel).
For 2027, forecasts for average quarterly prices are $71, $67, $60, and $56 per barrel, respectively, compared with previous forecasts of $68, $63, $60, and $55 per barrel, respectively, according to Bloomberg.
“The market has rebalanced due to a completely different ratio of demand contraction to inventory drawdowns than we initially anticipated,” the bank notes.
According to JPMorgan’s estimates, oil flows through the Strait of Hormuz currently stand at about 8.6 million barrels per day, with an average of about 6.3 million barrels per day for June. The bank’s analysts believe that the global oil market will enter 2027 with prospects for a significant increase in supply, which will be provided by Venezuela, Iran, Brazil, Guyana, Argentina, Canada, and the United States.
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