Worst of Oil Crisis May Be Over. Forecast as of 27.05.2026 | LiteFinance
Geopolitics has long been pushing Brent prices higher. However, hopes for an end to the conflict in the Middle East are now driving oil prices lower. Let’s examine the situation and develop a trading plan.
The article covers the following subjects:
Major Takeaways
- China has substantially curtailed its oil imports.
- The US and Iran are not giving up on negotiations.
- Restoring transit is a long process.
- As long as Brent trades below $98.6, short trades can be considered.
Weekly Fundamental Forecast for Oil
High oil prices have started to reduce demand and boost supply. They have helped the US increase exports to record levels, while China has cut its oil imports to 6.6 million bpd, the lowest since 2016. At the same time, the use of strategic oil reserves has helped ease pressure on the global economy during the worst oil market crisis in history. As a result, the market has likely passed the peak of the crisis. The focus is now on how fast Brent can move back toward pre-war levels.
China’s Crude Oil Imports
Source: Wall Street Journal.
Buy when fear is at its peak, and sell when tensions begin to ease. Despite the escalation between the US and Iran, triggered by attacks on mine-laying vessels in the Strait of Hormuz, neither Washington nor Tehran appears ready to abandon negotiations. Meanwhile, tanker traffic through the world’s main oil shipping route continues to increase, improving investor sentiment.
The first stage of the deal would involve extending the ceasefire for 60 days and reopening the Strait of Hormuz. The second would focus on more difficult issues, including sanctions relief, the unfreezing of Iranian assets, and Tehran’s nuclear program. For now, Iran refuses to stop charging transit fees for tankers despite pressure from Washington. It would be premature to consider an agreement guaranteed, let alone its full implementation.
Oil Futures Curve
Source: Wall Street Journal.
Nevertheless, markets often move ahead of actual events as investors rush to avoid missing the rally. FOMO, or fear of missing out, is adding downward pressure on Brent prices. The main question now is how quickly Brent can return to pre-war levels. Judging by the futures curve, the process is likely to be gradual. The derivatives market suggests oil prices will stand near $83 per barrel at the end of 2026 and around $76 a year later.
Goldman Sachs believes there are solid reasons for this. Traffic through the Strait of Hormuz is unlikely to normalize quickly. A shortage of empty tankers and limited pipeline capacity for transporting stored oil will slow the process, while tanker owners remain concerned about the risk of new attacks. Oil production will also take time to recover, especially at fields that have been shut down for a prolonged period.
Weekly Trading Plan for Brent
Anyway, investors care more about direction than speed. If the situation in the Middle East continues to stabilize, Brent may move lower. A breakdown in negotiations between the US and Iran would be the main reason to buy oil. Conversely, further progress toward a deal could become a signal to open short positions. As long as Brent remains below $98.6 per barrel, one may consider short trades.
This forecast is based on the analysis of fundamental factors, including official statements from financial institutions and regulators, various geopolitical and economic developments, and statistical data. Historical market data are also considered.
Price chart of UKBRENT in real time mode
The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteFinance broker. The material published on this page is provided for informational purposes only and should not be considered as the provision of investment advice for the purposes of Directive 2014/65/EU.
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