Brent crude is trading above $105 per barrel as of mid-May 2026. A year ago it was near $70. The question everyone is asking — when does it come down, and how far — depends almost entirely on one variable: how long the Strait of Hormuz stays effectively closed.

Major forecasters have published their 2026 and 2027 outlooks in recent months. The ranges are unusually wide. Understanding why the numbers differ so much is as useful as knowing what the numbers are.

What the Major Forecasters Are Saying

World Bank published its April 2026 Commodity Markets Outlook projecting energy prices will rise 24% in 2026, with Brent averaging $86 per barrel for the full year. That forecast was made in late April, before the most recent price surge. At current prices, the full-year average of $86 requires prices to fall significantly and stay there through December. The World Bank's upside scenario puts Brent at $115 per barrel if disruptions persist.

IEA (International Energy Agency) cut its 2026 demand growth forecast to reflect the economic drag of high energy prices and flagged "greater volatility ahead" in its May report. The IEA does not publish a single price forecast the way equity analysts do, but its supply-demand balance figures imply sustained tightness through at least mid-2027 if Hormuz throughput remains below 20% of pre-crisis levels.

Goldman Sachs estimated in March that a complete six-month Hormuz closure would push Brent above $150 per barrel in the absence of coordinated emergency responses. With the closure now in its third month and strategic reserve releases underway, Goldman's near-term range sits between $100 and $120, with the lower end contingent on diplomatic progress and the upper end triggered by another military escalation.

EIA (US Energy Information Administration) publishes monthly Short-Term Energy Outlooks. Its pre-crisis baseline had Brent averaging $74 for 2026. That number is no longer operative. Its most recent update revised the 2026 average sharply higher but noted the forecast carries "exceptionally high uncertainty" and will be updated as the diplomatic situation develops.

Why the Ranges Are So Wide

Oil price forecasting is notoriously difficult even in calm markets. The historical record shows that professional forecasters, futures markets, and even the agencies closest to the data routinely miss by $20 to $30 per barrel over a 12-month horizon.

The current environment makes forecasting harder than usual for three reasons.

The key variable is political, not economic. In a normal market, analysts model supply growth, demand trends, OPEC behavior, and inventory data. Those inputs have known ranges and historical precedents. The question of whether the US and Iran reach a nuclear and ceasefire agreement — and on what timeline — is not an economic variable. It is a political one, with an outcome that depends on decisions made by a small number of individuals in circumstances that have no close historical parallel. No model handles that well.

The disruption is larger than the calibration data. Most supply disruption models were built using data from past crises: the 1973 embargo, the 1979 Iran revolution, the 1990 Gulf War, the 2011 Libya disruption. None of those removed more than 5 million barrels per day from global markets for more than a few months. The current Hormuz closure has removed more than 16 million barrels per day from effective global supply. The models are extrapolating well outside their training range.

Bypass capacity and demand destruction are hard to estimate. Saudi Petroline, the UAE's ADCOP pipeline, strategic reserve releases, and rerouted non-Gulf supply are all partially offsetting the disruption. How much they offset it, and how demand adjusts at sustained $100-plus prices, determines whether the market clears at $105 or $140. Those numbers are genuinely uncertain.

The Scenario Framework

Rather than a single forecast, most serious analysts are working with scenarios.

Deal scenario (Brent $75–$90 by end-2026). A US-Iran agreement that includes verifiable Hormuz reopening provisions, signed before July, would release the structural supply constraint. Gulf exports would ramp back toward normal over 60 to 90 days. Prices would fall steeply — potentially 25% to 35% from current levels — as the risk premium unwound and stranded supply returned to market. The forward curve, which has late-2026 Brent contracts in the low-to-mid $90s, is roughly pricing this as a meaningful probability.

Stalemate scenario (Brent $95–$115 through 2026). Talks continue without resolution. The ceasefire holds but produces no deal. The strait stays at 5% to 10% of normal throughput. Prices stay elevated but do not surge further. This is where markets appear to be anchored today — Brent above $100 but not approaching $130, reflecting a market that believes the disruption is real but not permanently catastrophic.

Escalation scenario (Brent $125–$150+). A breakdown in the ceasefire, another significant Hormuz military incident, or a collapse of the Trump-Xi diplomatic track triggers a new price spike. Goldman's $150 estimate applies here. The IEA's emergency stock mechanism and coordinated SPR releases would be activated, providing some ceiling, but the market has limited tools to cover a sustained 16-million-barrel-per-day shortfall at full emergency response.

What the Forward Curve Says

The oil futures market is one forecasting tool that has money behind it. As of mid-May 2026, Brent futures for delivery in late 2027 are trading in the high $80s — roughly $17 below the current spot price. That backwardation tells you what traders are willing to lock in for future delivery, which reflects their probability-weighted view across scenarios.

It is not a point forecast. A Brent curve at $88 for December 2027 is consistent with many combinations of scenarios: a deal that cuts prices sharply followed by a partial recovery, a prolonged stalemate that slowly resolves, or a volatile path that averages out near $88. The curve reflects the cost of hedging, not a consensus prediction.

Importantly, the back of the current Brent curve is significantly above pre-crisis norms. Brent futures for late 2027 were trading near $68 before the conflict began. The fact that they are now in the high $80s tells you the market has not priced in a return to pre-crisis conditions anytime in the next 18 months.

What Would Move Prices Lower

A Hormuz deal is the only near-term mechanism that materially lowers prices. SPR releases, pipeline bypasses, and demand destruction are all in play, but none of them closes a 16-million-barrel-per-day gap. They buy time and limit the upside, not the baseline.

Longer term — 2027 and beyond — non-OPEC supply growth from US shale, Brazil's deepwater fields, and other producers could rebalance a market that has recovered Hormuz access. Global demand growth is also being compressed by high prices, accelerating EV adoption in some markets, and the general economic drag of an extended energy crisis. Both factors work toward lower prices over a multi-year horizon.

Why Forecasts Are Useful Despite Being Wrong

The point of an oil price forecast is not to predict the number. It is to understand which variables matter most and in what direction they push prices. The current situation makes the key variable unusually clear: Hormuz throughput. Every week that the strait operates at 5% of normal is a week that reinforces the stalemate scenario. Every credible signal of diplomatic progress shifts the probability distribution toward the deal scenario.

Watching the forecast ranges narrow or widen — and understanding why they move — tells you more about the market than the midpoint number does.

This article reflects analyst forecasts and market data current as of May 2026. Oil price forecasts are subject to significant uncertainty. This article is for informational purposes only and does not constitute financial or investment advice.