Barclays cuts Brent crude forecasts as oil prices plunge

Barclays on Friday cut its Brent crude price forecasts for 2026 and 2027 after oil plunged roughly 30% from late May highs following the U.S.-Iran deal.lookonchain+1
As recently as May 22, the bank had maintained a $100 forecast and warned risks were skewed higher due to inventory drawdowns from the Strait of Hormuz closure.reuters
Barclays strategists separately argued that falling oil prices could shift the market narrative toward disinflation in the second half of 2026, supporting European equities.investing

Barclays on Friday lowered its Brent crude oil price forecasts to $96 per barrel for 2026 and $85 per barrel for 2027, down from $100 and $88 respectively, as a rapid collapse in oil prices following the U.S.-Iran deal reshapes the bank's outlook for global energy markets.lookonchain+1

The revision marks a sharp turn from the bullish stance the bank held just weeks ago. As recently as May 22, Barclays maintained its $100 forecast and warned that risks were skewed to the upside due to severe inventory drawdowns from the Strait of Hormuz closure.reuters+1

Oil's Dramatic Slide

The catalyst for the downgrade is clear: oil prices have cratered since mid-June after the United States and Iran reached a tentative agreement to reopen the Strait of Hormuz, through which roughly a fifth of the world's oil supply passes. Brent crude, which traded above $105 per barrel in late May, fell below $75 on Friday — a decline of roughly 30% in little over a month.youtube+1

The speed of the selloff has been remarkable. On June 14, oil prices dropped sharply after President Trump, Iranian leaders, and Pakistani negotiators signaled that a ceasefire and Hormuz reopening deal would be signed. Prices have continued sliding as markets price in a return to pre-conflict supply flows.wqln+1

Disinflation Narrative Takes Shape

Separately, Barclays strategists argued in a note published this week that falling oil prices and easing commodity pressures could shift the market narrative toward disinflation in the second half of 2026.investing

"If oil prices remain well behaved near current levels, disinflation could be the regime to position for into H2," wrote the team led by Emmanuel Cau. The bank sees this backdrop as supportive for European equities and cyclical sectors that have lagged.investing

A Stronger Dollar Adds Complexity

The disinflation thesis arrives alongside a resurgent U.S. dollar, which hit a one-year high this week after a hawkish Federal Reserve posture flattened the yield curve. The combination of lower oil and a stronger dollar is reshaping financial conditions globally, particularly for emerging-market oil importers that benefit from cheaper energy but face tighter dollar liquidity.convera

Barclays' revised $96 forecast for 2026 still implies prices will recover from current levels near $73-75, suggesting the bank expects the post-deal selloff has overshot somewhat — but not enough to justify the triple-digit outlook it held when the Strait of Hormuz remained closed.markets.ft+1

Sources (39)