Brent crude oil prices are expected to remain elevated in the near term, trading in a range of USD 75-85 per barrel through the second half of 2026, before softening in 2027 as global supply recovers sharply, according to a research report by ICICI Bank Research.
Supply Deficit to Shift to Surplus by 2027
The report indicates that 2026 will remain supply-deficient, but 2027 is projected to swing into a surplus. A net supply deficit of 1.6 million barrels per day (mbpd) over 2026 is likely to keep Brent crude prices within the USD 75-85/bbl range during H2 2026, with an average of USD 85/bbl for the entire year. However, as supply picks up sharply in 2027, a surplus of about 2 mbpd is expected, pushing prices downward to a range of USD 65-75/bbl. This outlook assumes no further geopolitical disruptions and global economic growth holding near 3 percent in 2027.
Impact of US-Iran Ceasefire on Oil Markets
The report notes that energy prices dropped significantly after the United States and Iran signed a memorandum of understanding for a 60-day ceasefire. Brent crude touched a three-month low of USD 79/bbl following the agreement, which includes the reopening of the Strait of Hormuz, unfreezing of Iranian assets, and waivers for Iran to increase crude exports. ICICI Bank Research stated that the prospect of reopening the Strait of Hormuz and providing waivers to Iran could improve supply over the medium term.
Near-Term Tightness in Physical Markets
Near-term stickiness in prices is underpinned by tight physical balances. Between March and May 2026, demand contracted by 4.7 mbpd, led by sharp declines in the United States and China, while supply dropped by 13.6 mbpd, with 13 mbpd coming from Gulf Cooperation Council (GCC) countries. The supply-demand imbalance deteriorated by 9 mbpd, but a sharp inventory drawdown of 6 mbpd helped stabilize the market. In May 2026, supply fell further by 0.8 mbpd to 93.7 mbpd as OPEC output declined, pushing the net supply deficit to 6 mbpd. Inventory withdrawals averaged 15.98 mbpd between March and May, with the United States drawing down 30 million barrels since February.
Key Factors Driving Price Trajectory
ICICI Bank Research said the price trajectory will depend on pent-up demand, inventory replenishment, and the pace of GCC output recovery. GCC production is expected to reach 82 percent of pre-conflict capacity by September 2026 and 90 percent by December 2026. For 2027, demand is projected to rise by 1.9 mbpd to 105.4 mbpd, but supply could increase by 5.5 mbpd to 107.4 mbpd as Iran receives waivers and the UAE raises output, creating a 2 mbpd surplus and capping prices.
