Oil's risk premium unwound fast this week after a US–Iran memorandum of understanding reopened the Strait of Hormuz, and the published consensus tilted decisively bearish by week's end.
Brent slid from near $110 to the high $70s as tankers resumed transit, Kuwait flagged higher output, and stranded cargoes prepared to move. Multiple research desks now see Brent drifting toward $70–85 through late 2026, with one widely cited monthly outlook warning of a 5 mb/d oversupply by 2027 as China and Japan draw down reserves. A separate analysis argued sustained oil in the low $70s could push headline inflation close to zero over the next six months — easing the case for further Fed tightening.
A contrarian thread pushed back: physical inventories remain drawn down, Hormuz flows won't fully normalize until end-2026, and the ceasefire could fray. Those voices see Brent rebounding toward $90–100, with one scenario framework assigning a 25% probability to that path and 15% to a conflict relapse above $100. Structural underinvestment was cited as a longer-term floor.