OCBC Group Research has revised down its Brent crude price forecasts through the second quarter of 2027, arguing that the recovery in oil shipments through the Strait of Hormuz has reduced supply concerns and shifted market attention back towards the prospect of excess global production.
Brent price expectations reduced
The bank now forecasts Brent crude will average $75 per barrel in both the third and fourth quarters of 2026, compared with previous estimates of $85 and $80, respectively.
Its outlook for the first quarter of 2027 has been lowered to $73 per barrel from $75, while the second-quarter 2027 forecast has been cut to $71 per barrel from $75.
In a research note, OCBC strategists said, “Shipping traffic—and thus oil flows—through the Strait of Hormuz has picked up following the U.S.-Iran memorandum of understanding.”
They added, “Expectations of normalized flows quickly pushed crude prices back to pre-conflict levels, reviving the oversupply narrative.”
Crude prices remain under pressure
Oil markets extended their recent losses on Thursday, with Brent and U.S. West Texas Intermediate (WTI) both falling to their lowest levels in four months.
By 06:54 GMT, Brent crude was trading 1.1% lower at $70.80 per barrel, while WTI had declined 1.5% to $67.58 per barrel. Both benchmarks had also fallen by more than 1% during the previous session.
The latest weakness followed comments from Qatari officials indicating that indirect discussions between the United States and Iran had made progress regarding the Strait of Hormuz.
A spokesperson for Qatar’s Ministry of Foreign Affairs wrote on X that negotiations had delivered “positive progress” on matters linked to the memorandum of understanding that ended the June conflict, although no breakthrough towards a permanent peace agreement was announced.
OCBC also trims precious metals forecasts
The research house also lowered its outlook for gold and silver prices this week.
OCBC now expects gold to reach $4,360 per ounce by the end of 2026, down from its previous forecast of $5,100, while its silver forecast was reduced to $67 per ounce from $89.50.
According to the bank, higher real interest rates, a stronger U.S. dollar and increasingly hawkish expectations for Federal Reserve policy have weakened demand for precious metals.
Despite the revisions, OCBC maintained its positive long-term outlook, forecasting gold to average $4,180 per ounce by September 2026 before rising to $4,820 by September 2027. The bank also expects silver to increase from $64 to $74 per ounce over the same period.
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