Oil prices continued their decline on Tuesday amid mounting pressure from weak global demand and expectations of a gradual return of Middle East supplies, as navigation through the Strait of Hormuz improved and geopolitical risks eased, pushing Brent crude to its lowest level in several months near $75 a barrel.
JPMorgan cut its Brent price forecasts for the second half of 2026, citing slowing global demand and weaker-than-expected drawdowns in commercial inventories held by Organisation for Economic Co-operation and Development countries. The bank forecast an average price of $86 a barrel in the third quarter of 2026 and $80 in the fourth quarter, before the year ends at $78, warning that an anticipated supply surplus in late 2026 could extend its impact into the first half of 2027, potentially forcing further pressure on production.
The bank noted that markets are currently experiencing a decline in the effectiveness of inventory draws, with greater reliance on government releases from strategic reserves, while actual demand continues to show notable weakness — factors that reduce price support. It also pointed to a rise in global oil flows to around 8.6 million barrels per day, compared with a lower average in preceding months, reflecting a gradual increase in supply.
On the immediate front, price pressures deepened as expectations grew for additional oil shipments to resume through the Strait of Hormuz, amid signs of a political thaw and the possibility of eased restrictions on Iranian oil exports. Analysts say markets have already begun pricing in the prospect of a swift return of Iranian oil, particularly given volumes stored aboard tankers that could be exported within a short period, reinforcing selling pressure on prices.
China added a further bearish factor after operating rates at independent refineries fell to a nine-year low of 50.5%, the result of rising crude costs, weak domestic demand, shrinking profit margins, and restrictions on refined-product exports. The decline reflects continued pressure on the world's largest oil importer, limiting any strong recovery in near-term global demand.
As these factors converge — weak demand, rising supply, and shifting trade flows — the oil market appears to be entering a complex rebalancing phase during which price pressures may persist.