- Crude oil prices dropped to six-week lows just two days ago but the prospect of a $100 support in the near-term is becoming more likely
- The Iran war has been keeping traders on the edge, but analysts are increasingly convinced that investors are potentially expecting too much from US-Iran ceasefire negotiations
- Fitch Ratings' latest review says closing Strait of Hormuz into Q4 2026 could establish crude oil price support at $100, while J.P. Morgan Global Research says the price could potentially drop to an average of $60s
Crude oil prices look stronger again in early June 2026. They’ve risen for two days straight, building on gains after hitting six-week lows just days before. Initial optimism about a potential diplomatic breakthrough between the United States and Iran temporarily reduced the geopolitical risk premium influencing energy markets. However, that relief proved incredibly short-lived.
Why Is Oil Price Rising?
Prices recently jumped after a sharp fall. That earlier drop stemmed from optimism about potential peace talks. Brent crude, the global benchmark, is now back near $98 a barrel while West Texas Intermediate (WTI) trades around $96. This rebound suggests hopes for a quick end to the conflict, which disrupts flows through the Strait of Hormuz, are fading.
Second, supply dynamics remain precarious. Industry data showed crude inventories declined by 6.8 million barrels last week, which if confirmed by official government figures would mark the sixth consecutive weekly drawdown in US crude stockpiles. This inventory depletion suggests tightening physical supply that supports prices.
Adding to these worries, the International Energy Agency (IEA) warned that global oil inventories could fall to dangerously low levels before the busy summer driving season if rapid drawdowns continue. With so little physical supply available, any geopolitical event could trigger a much larger price jump.
The Road to Reclaiming the $100
With Brent now in the upper $90s, the $100 per barrel mark is within reach. Reaching this level consistently depends on how long the world’s critical energy chokepoint remains affected.
According to an updated June 2026 commodities assessment by Fitch Ratings, global oil prices are highly likely to average a strict $100 per barrel through the rest of the year if the Strait of Hormuz remains closed or heavily disrupted into the fourth quarter of 2026.
Since Iran has mined significant portions of this waterway, restoring normal commercial vessel traffic will be a slow and complex process, even with a ceasefire. If shipping flows do not normalize by late Q3, triple-digit oil prices become very likely.
Are Investors Expecting Too Much?
Many investors seem to have priced in significant relief from a potential agreement. However, institutional analysts increasingly agree the market might be overestimating how quickly a peace deal would bring that relief. Even with a formal agreement, it’s unrealistic to expect an immediate flood of cheap crude to hit the market.
Repairing damaged infrastructure, rebuilding inventories, and restoring full shipping confidence will probably take months, maybe even longer. Even a framework agreement won’t guarantee full normalization before 2027. So, near-term supply tightness could easily persist.
However, not all institutions share this perspective. Despite the recent increase in oil prices, J.P. Morgan Global Research projects Brent crude to average around $60 per barrel in 2026. This forecast is based on supply-demand fundamentals that suggest lower oil prices in the coming months.
The decline was driven by continuing US-Iran peace negotiations uncertainty, sixth consecutive weekly decline in US crude inventories, and geopolitical risk premium from Middle East conflict supporting prices above technical lows.
That is likely yes, because physical supply normalization requires three to six months and deal merely removes blockade rather than instantly restoring production infrastructure.
According to Fitch Ratings, oil will average $100 if the Strait of Hormuz maritime blockades persist into the third or fourth quarter of 2026.
