Analysts cut 2026 oil forecasts as Gulf output rebounds faster than expected

Global oil prices have fallen sharply to pre-war levels as production across the Persian Gulf recovers at a pace that has surprised analysts, just weeks after the United States and Iran agreed to a ceasefire and the Strait of Hormuz began reopening to commercial shipping.

Brent crude was trading around $73 per barrel as of late June, down from peaks above $120 during the height of the U.S.-Iran conflict that began in late February. West Texas Intermediate hovered near $70, fully unwinding the war-driven rally.energyconnects+2

A Rapid Supply Recovery

Rystad Energy estimates that shut-in production across the Gulf fell to 9.6 million barrels per day in mid-June, down from 11.7 million bpd just three weeks earlier — a restoration of roughly 2.1 million barrels per day. The consultancy has pulled forward its forecast for a full regional supply recovery by a full quarter, now expecting output to return to pre-conflict levels by December 2026 rather than the first quarter of 2027.aletihad+1

"Two million barrels a day came back online in three weeks, and the recovery is spread across the region," said Aditya Saraswat, MENA research director at Rystad Energy. Saudi Arabia is on track to pump a record 4.5 million barrels per day through its Yanbu export terminal this month, while Kuwait Petroleum Corporation lifted all force majeure notices on June 19 and plans to raise output to 2 million bpd.opis+1

Three developments shifted the outlook in quick succession: the preliminary U.S.-Iran agreement signed on June 17, Washington's decision to grant Iran a 60-day license to sell oil internationally, and restart timelines from Gulf producers that came in ahead of earlier estimates.energyconnects+1

Analysts Cut Forecasts

A Reuters Thomson Reuters Corporation ↗ 0.85% poll published Tuesday showed forecasters cutting their 2026 oil price outlooks for the first time since the Iran war began. The survey of 31 economists and analysts projected Brent crude to average $84.50 per barrel this year, down from $90.44 forecast in May. Barclays ↗ 0.00% separately reduced its 2026 Brent forecast to $96 from $100.mitrade+1

Crude Flows Redirected Westward

The supply surge is now creating unusual trade flows. Asian refiners, having secured enough non-Middle Eastern crude to cover the next two months during the disruption, are offering newly available Persian Gulf cargoes to U.S. West Coast buyers — the first such flows since 2018, according to Bloomberg reporting. U.S. inventories at Cushing, Oklahoma, and in the Strategic Petroleum Reserve have dropped to multi-decade lows, making American buyers receptive to the redirected barrels.investing+1

The weekend saw a brief flare-up as U.S. and Iranian forces exchanged strikes, pushing Brent slightly higher on Monday, but Washington and Tehran agreed late Sunday to resume talks in Doha on Tuesday.aljazeera