Brent Back at $75 as Hormuz Reopens and Traders Eye a 2027 Glut
Crude has round-tripped to pre-war levels after Washington and Tehran agreed to negotiate, leaving spring's $120-plus supply-strain calls stranded above the market.
ICE Brent crude front-month has round-tripped to pre-war levels after the United States and Iran agreed to negotiate a deal that includes reopening the Strait of Hormuz, oilprice.com reported on Tuesday (2026-07-07).5 Front-month Brent traded at $75.22 a barrel on Friday (2026-07-11), with Middle East flows returning to the market and analysts now expecting the global glut to reappear as early as 2027.5
The reversal strands the bullish framework that dominated positioning two months ago. In late May, ICE Brent front-month changed hands near $105.83 and US West Texas Intermediate near $99.23.2 The premium that Hormuz risk had built into the curve has largely bled out.5
Citi told clients on Tuesday (2026-05-19) that Brent would rise to $120 a barrel in the near term, arguing markets were underpricing the risk of prolonged disruption, while Wood Mackenzie estimated prices could approach $200 in an extreme case.3 A Bloomberg Intelligence survey found a majority of participants expecting Brent to average $81 to $100 a barrel over the next 12 months.1 The market now sits below the bottom of that range.1
At the peak of the disruption the physical squeeze was real. The US Energy Information Administration reported that the country drew nearly 10 million barrels from its Strategic Petroleum Reserve in the week of 2026-05-11, the largest weekly withdrawal ever recorded.2 Three supertankers holding 6 million barrels of Middle East crude crossed Hormuz on Wednesday (2026-05-20) after waiting in the Gulf for more than two months.3
The demand side did much of the buffering. The United States lifted exports by 3.8 million barrels a day and China cut imports by 5.5 million barrels a day, together shielding the rest of the world from 9.3 million barrels a day of tightness, according to figures cited by TT News on Tuesday (2026-05-19).4 Morgan Stanley had warned the market was in a race against time if the waterway stayed shut into June.4
What replaces the war premium is a supply picture tilting the other way. The EIA projects US crude output climbing to a record 14.1 million barrels a day in 2027.1 With Iranian barrels flowing again, a balance that looked desperately tight in May now looks comfortable heading into next year.5
Still, the round trip is not the all-clear. The May survey work flagged a wide distribution of outcomes, with most respondents seeing disruptions averaging 3 million to 7 million barrels a day and few expecting outages above 10 million.1 A negotiated reopening is not a signed deal, and the barrels moving through Hormuz depend on a diplomatic framework not yet tested by a missed deadline.5
The positioning data hint at lingering caution. About a quarter of surveyed participants expected an increase in hedging and risk-management activity, against 15 percent looking to take on more opportunistic risk.1 Desks burned chasing the spike are inclined to buy downside protection rather than fade the recovery outright.1
The next signal is whether the negotiation holds long enough for the 2027 glut thesis to harden into forecasts and, in turn, into OPEC+ output decisions.5 A ceasefire that removes a risk premium is one thing; producer policy that leans into extra supply is another, and it can push a move further than the physical balance alone would justify.1 Watch for the first sign that Gulf producers treat the reopening as permission to add barrels rather than defend price.5