Brent crude to hold near-term before softening in 2027 on supply recovery: Report

Brent crude oil prices are anticipated to remain firm, trading within the $75 to $85 per barrel range through the latter half of 2026. This near-term stability is attributed to tight physical markets, driven by pent-up demand and ongoing inventory replenishment, according to a report by ICICI Bank Research.

“

Hence, a net supply deficit of 1.6mbpd over 2026 would likely ensure that Brent Crude oil prices trade in the $75/bbl to $85/bbl range over 2H2026 and at an average of $85/bbl over all of 2026.

However, the outlook shifts significantly for 2027. The report forecasts a "downside bias" for Brent crude prices, projecting them to trade between $65 and $75 per barrel. This expected softening is due to a projected sharp increase in supply as the market swings from a deficit to a surplus of approximately 2 million barrels per day.

The report's projections are contingent upon several factors, notably the absence of further geopolitical disruptions in key energy-producing regions and global economic growth holding steady around 3 percent in 2027. The recent US-Iran memorandum of understanding, which included provisions for reopening the Strait of Hormuz and unfreezing Iranian assets, has already influenced prices, pushing Brent to a three-month low of $79 per barrel.

“

Going into 2027, supply is expected to pick up sharply that could ensure a supply surplus in the physical energy markets to the tune of 2mbpd ensuring that Brent crude prices trade with a downside bias. We see Brent Crude oil prices in $65-75/bbl range over all of 2027.

ICICI Bank Research highlighted that the supply-demand balance has been precarious, with significant inventory drawdowns helping to stabilize the market despite supply deficits. The recovery pace of GCC output and Iran's potential return to the market with waivers are key variables that will shape the price trajectory in the coming years. By September 2026, GCC production is expected to reach 82% of pre-conflict capacity, increasing to 90% by December 2026.

“

For the crude oil markets, the prospect of the re-opening of the SoH and possibly providing waivers to Iran could improve supply over the medium-term.