Wall Street and Fitch lower oil price expectations together, but warn that the reopening of the Hormuz Strait may just be a "paper positive".

After reaching an agreement aimed at ending the war and reopening the Strait of Hormuz between the United States and Iran, the international oil price fell to the lowest level since early March this year as market sentiment turned positive due to the expected recovery of Middle Eastern oil supply. Wall Street giants Morgan Stanley, Goldman Sachs, and international rating agency Fitch all lowered their oil price forecasts for the fourth quarter of this year, citing expectations that the speed of crude oil exports in the Persian Gulf region could be faster than previously anticipated. Several institutions have lowered their oil price predictions Morgan Stanley expects that the average price of Brent crude oil spot in the third quarter will be $90 per barrel, lower than the previous forecast of $100 per barrel; the average price in the fourth quarter is expected to be $80 per barrel. Analysts at the bank, including Martijn Rats, stated in a report, "Although there are still many issues that need further negotiation and key risks remain, the current agreement is an important step towards easing tensions and increasing crude oil exports through the Strait of Hormuz." The United States and Iran announced on June 14 that they had reached a ceasefire memorandum of understanding. U.S. President Trump posted on social media that the U.S. agreement with Iran "now is done," he "authorized" the Strait of Hormuz to be "freely opened" and the U.S. Navy to immediately lift related blockades; once the agreement is officially signed on June 19, the Strait of Hormuz will be "reopened" on that day. Iranian Deputy Foreign Minister Gharibabadi confirmed that the text of the Iranian-US memorandum of understanding has been finalized, and the formal signing ceremony of the "Islamic Bezd Memorandum" will be held in Switzerland on June 19. U.S. Vice President Pence said on the 15th that the U.S.-Iran memorandum of understanding was expected to keep the Strait of Hormuz "open for the long term and free of tolls." However, Iranian Foreign Ministry spokesman Baghaei stated on the 15th that Iran would be responsible for managing safe passage through the Strait of Hormuz "for a specific period" and would charge fees for related shipping services. According to the text of the memorandum of understanding, Iran, as a coastal country of the Strait of Hormuz, will take necessary measures with Oman to ensure the safe passage of ships through the strait. However, due to uncertainties such as shipping security, most shipowners and operators are currently adopting a wait-and-see attitude, stating that they need more details to assess whether they can safely navigate through the strait. In addition, according to the analysis cited by the market service agency Kepler, of the hundreds of idle ships in the Gulf, nearly 300 are already loaded and ready to pass through the Strait of Hormuz at any time, while there are approximately the same number of ships in the Gulf of Oman waiting to return to major export terminals. Theoretically, this would release millions of barrels of oil supply, but actual passage still faces multiple obstacles, including the need to clear ship attachments and contesting the right to pass through narrow shipping lanes. Morgan Stanley believes that the return of normal tanker transport may still take "several weeks" because it still needs to complete mine clearance work, rebuild the commercial confidence of shipowners and insurance companies, and wait for ships that have been evacuated from the region to return. Morgan Stanley analysts stated, "To resume crude oil production, it is necessary to empty oil export tanks. Therefore, the number of empty oil tankers entering the Persian Gulf may be more important than the number of laden tankers leaving the Gulf." They added, "We expect that 50% of shutdown production capacity will be restored by September, 80% by December, and the remaining portion will gradually be restored by early 2027." In contrast, Goldman Sachs is more optimistic. Goldman Sachs expects that Middle East oil supply will fully recover as fast as before the end of next month. The bank stated in a report that it currently expects the Brent crude oil price for the fourth quarter to be $80 per barrel, lower than the previous forecast of $90 per barrel. Goldman Sachs analysts Daan Struyven and others stated in the report, "Although the details of the agreement are not clear, we currently assume that Middle East oil exports will return to pre-war levels by the end of July." Fitch also released a report on Monday, stating that although the specific terms of the agreement have not been made public, the reopening of the Strait of Hormuz, a key lifeline for global energy transport, is expected to be slightly ahead of what the organization previously expected. Fitch made a key assessment in the report: "If the Strait of Hormuz is fully opened, with regional crude oil production gradually returning to normal levels and maritime shipping returning to normal, the global oil market will re-enter a situation of oversupply in about a month." Fitch's assessment is based on the rapid recovery of supply - Iran and neighboring oil-producing countries will accelerate production, and regional oil export capacity is expected to reach pre-conflict levels within weeks. Non-OPEC countries continue to increase production; the production rates of non-OPEC oil-producing countries such as the United States, Brazil, and Guyana are still rising, with strong growth expected in non-OPEC supply in 2026. OPEC production capacity is elastic - OPEC has ample spare production capacity, and if member countries release more production to compete for market share, it will intensify supply pressure. Fitch maintains its benchmark forecast for the average price of Brent crude oil in 2026 at $87 per barrel but points out that with the early reopening of the Strait of Hormuz, this forecast faces significant downside risks. Specifically, the agency expects the average price of Brent crude oil in the fourth quarter to fall to $70 per barrel. For 2027, if supply remains in surplus and demand growth remains weak, oil prices may further fall to $65 per barrel or even lower. The reopening of the Strait of Hormuz is expected, but it is difficult to "reset with one click" Trade data company Kpler stated on Monday that if the agreement reached between the U.S. and Iran can be implemented smoothly without major setbacks, the flow of ships through the Strait of Hormuz is expected to return to nearly 50% of the pre-war level within a month. Analysts at the company stated in a research report that the number of ships passing through the Strait of Hormuz daily is expected to increase to 40, while before the U.S. and Israel attacked Iran on February 28th, the average number of ships passing through the strait was about 100. Analysts stated that the first ships to pass through the Strait of Hormuz will be those ships stranded in the Persian Gulf and have completed loading. They estimated that there are approximately 118 oil tankers in the Persian Gulf that can leave the region in 15 days. Analysts pointed out that the departure of a large number of stranded ships is a one-time event and should not be interpreted as a sustained increase in shipping traffic. The real key question is how many ships will re-enter the Persian Gulf after the backlog capacity is digested. Kpler analysts stated that there are currently a large number of ships waiting in the Gulf of Oman and the Arabian Sea for the reopening of the Strait of Hormuz. Wright stated that within the first 30 days after the U.S.-Iran agreement comes into effect, the number of oil tankers entering the Persian Gulf may increase to 12 per day, about 50% of the pre-war levels. Although the market is becoming more optimistic about the Strait of Hormuz reopening and the expected recovery of Middle Eastern oil supply, it is still unclear how much of a threat mines pose to ships passing through the strait. The Global Shipping Trading Organization Bimco warned on Monday that "the threat of mines in the region remains a cause for concern." The organization reminded ship operators that the local security situation is still considered high risk. Jakob Larsen, Bimco's head of safety and security, stated, "Due to the lack of sufficient details and past instances of overly optimistic security assurances, we believe that the shipping industry still faces significant uncertainty in terms of security." "At this stage, we still believe that the risk of ships resuming passage through the strait is very high." Haris Khurshid, Chief Investment Officer of Karobaar Capital LP in Chicago, stated, "The market often sees the reopening of the Strait of Hormuz as flicking a switch, but in reality, it's more like a long-term process." "Physical flows can reboot quickly. Confidence levels usually don't." He added that the reopening of the strait and normalization of trade flows are two different things, pointing out that many buyers and insurers remain cautious, still fearing a reenactment of the Trump "crying wolf" scenario and some buyers have spent months securing alternative routes, suppliers, and inventories, and may not immediately return to this route once the Strait of Hormuz reopens. Priyanka Sachdeva, Senior Analyst at Phillip Nova Pte Ltd., stated in a report, "Although this geopolitical conflict may have ended and oil transport through the Strait of Hormuz may gradually return to normal, the damage caused cannot be reversed overnight." "This includes any actual damage that may have occurred to oil-related infrastructure in Gulf countries like the UAE, as well as the economic pressure suffered by oil-importing economies after enduring high energy costs for months." Charu Chanana, Chief Investment Strategist at Saxo Markets, pointed out, "It is still too early to rule out the risk of oil prices rising. The negotiation process has not yet fully transitioned into a stable execution agreement." He added, "If demand remains strong and the supply recovery is slower than expected, oil prices may still receive some support." The potential risks of subsequent negotiations between the U.S. and Iran, and whether the agreement can be smoothly implemented, are still one of the points of concern. Some analysts point out that the U.S.-Iran memorandum of understanding will be the first step in achieving regional stability, but the next stage of negotiations between both sides is still complex and difficult, and the possibility of reaching a final agreement remains to be seen. The possibility of a return to the "war and peace cycle" cannot be ruled out. Even though neither the U.S. nor Iran want to restart the war in full, Israel may refuse to completely "stop" in Lebanon and may persuade the U.S. to impose harsh conditions on Iran in areas such as nuclear issues, making it more difficult for the U.S. and Iran to reach a final agreement. Chris Weston, Director of Research at Pepperstone Group Ltd., stated that the agreement between the U.S. and Iran "makes me feel it is indeed based on a very fragile foundation." He stated, "With demands from Iran regarding rebuilding, compensation funds from the U.S., frozen or seized assets, and various factors, the ceasefire agreement may encounter many bottlenecks." Linh Tran, market analyst at XS.com, stated, "It is still too early to rule out the upside risk of oil prices. The negotiation process has not yet fully transitioned into a stable execution agreement." He added, "If demand remains strong and the supply recovery is slower than expected, oil prices may still receive some support."