J.P. Morgan Cuts Brent to $78 Year-End as Post-Hormuz Demand Weakness Overwhelms Supply Recovery
With Brent trading near $83 on Thursday (2026-08-06), bank forecasts point well below current levels as demand softness drives a bearish consensus.
ICE Brent crude front-month was trading at $82.89 per barrel as of 17:04 UTC on Thursday (2026-08-06), up 1.36% on the session, but that modest bounce does little to alter the direction banks have been marking toward for weeks. J.P. Morgan, in a forecast revision published in late June (2026-06-24), lowered its Brent price outlook for the rest of the year: $86 per barrel average in the third quarter, $80 in the fourth quarter, and a year-end finish around $78. For 2027, the bank projected $64 per barrel.4,5
The revision tracks an extraordinary arc. ICE Brent front-month rose from around $72 in late February to above $118 in March after the Strait of Hormuz effectively closed, cutting off a large share of global seaborne oil flows. By late June, following a U.S.-Iran peace deal that began reopening shipping lanes, prices had fallen back below $80. Nearly every major bank that published a price target revised downward over that same period.5
J.P. Morgan's analysis identified the mechanism behind the price reversal. The oil market absorbed the Hormuz supply shock not primarily through inventory drawdowns but through demand destruction — a combination that left balances looser than a simple supply-cut analysis would suggest. That demand-side response has made the subsequent price recovery shallower than the geopolitical spike implied.5
Morgan Stanley reached similar conclusions. The bank cut its Brent price forecast for the rest of 2026 and into 2027, citing the recovery of Hormuz flows as the proximate trigger, and flagged the prospect of a meaningful surplus in 2027. Before the conflict began, Morgan Stanley's balances had pointed to a two-million to three-million barrel-per-day surplus for the year; the Hormuz closure temporarily reversed that picture, but the reopening has put the market on course to rebuild it.6
Goldman Sachs issued its own cut in mid-June (2026-06-12), trimming its 2027 oil forecast to around $80 per barrel while warning separately that a renewed Hormuz crisis could send Brent to $140. The bank noted that rising output from the United States, Brazil, Guyana, Venezuela and the UAE was offsetting geopolitical risk even before the peace deal, and that a faster-than-expected supply normalization combined with soft demand could push Brent toward $70.3
Supply rerouting softened the Hormuz shock in ways that are easy to understate. Saudi Arabia ramped up use of its East-West Pipeline to Yanbu — a route capable of handling seven million barrels per day, though export capacity at the port limits actual flows to five million — while the UAE increased shipments through its Fujairah pipeline, rated at 1.8 million barrels per day. Together, Invezz reported, those alternative routes moved approximately four million barrels per day once the Strait closed.2
Still, the market's late-June trajectory showed how quickly the geopolitical premium was unwinding. By the week of June 30 (2026-06-30), Brent was testing the $73 support level, with sellers pressing toward $70 as a resurgent U.S. dollar added pressure. Analysts at the time expected demand to rebound once war-period stockpile drawdowns began refilling, which would mute any sharp upward correction.7
Mirae Asset's Mohammed Imran argued in late July (2026-07-31) that the risk on crude was skewed to the upside despite the retreat, projecting Brent would average around $80 if hostilities did not resume. But he set the condition explicitly: if Hormuz disruption extended into mid-September, Brent could average $90 by year-end. The U.S.-Iran peace deal remains the swing variable.8
ETO Markets CIO Jonathan Barratt had flagged the $80-to-$85 range as the likely landing zone once any Hormuz deal was finalized, in comments made in late May (2026-05-24), when Brent was still above $100 after falling more than 5% in a single session. That call has largely played out.1
The question hanging over the market now is whether Chinese demand recovers fast enough to absorb the supply that will continue coming back online. J.P. Morgan's demand-destruction framing implies that the Hormuz shock masked a pre-existing demand problem — one that doesn't resolve simply because shipping lanes reopen. Thursday's (2026-08-06) WTI front-month was holding at $77.98 per barrel, comfortably within the band where the J.P. Morgan year-end forecast becomes plausible if demand stays subdued. The next signal will be whether Chinese import data, when published, shows the rebound analysts have been waiting for since the ceasefire.5,7