JP Morgan expects Brent crude to remain in the low-$100s for much of 2026, even if the Strait of Hormuz reopens in June, as accelerating inventory draws and logistical bottlenecks keep the oil market tight, the bank said in a note.
JP Morgan's revised framework assumes that the pace of oil inventory depletion will ultimately force the strait to reopen "one way or another," with the bank's base case anchored on a June 1 reopening following a credible announcement confirmed by both sides.
However, the bank said prices were unlikely to normalise quickly, as OECD commercial inventories approach operational stress levels.
"Even if the strait reopens in June, the seasonal lift in summer demand, combined with the exceptionally large commercial stock draws seen in March and April, and likely again in May, should push OECD inventories toward operational stress levels by August," the bank said.
JP Morgan said the bottleneck would likely shift from the Strait itself to tanker availability, refinery ramp-ups and wider logistical constraints, keeping the market tight well into the second half of 2026.
The bank now expects Brent to average $96 per barrel in 2026, with quarterly averages of $103 in the second quarter, $104 in the third quarter and $98 in the fourth quarter.
Looking into 2027, JP Morgan expects producers in the Persian Gulf to maximise output after the strait reopens in an effort to recoup lost revenues.
High prices are also expected to encourage other producers to run at capacity, pushing the market into meaningful oversupply from September 2026.
By early 2027, the bank expects OECD commercial inventories to normalise toward pre-war levels, putting sustained downward pressure on prices.
(Reporting by Anushree Mukherjee in Bengaluru, Editing by William Maclean)
