Brent Forecast May 2026: Why the 10-Percent Correction Comes Too Early
Brent is trading at around $97 per barrel on May 26 — roughly 10 percent below last week's level and the lowest since April 2026. The correction is driven by optimism about an imminent U.S.-Iran agreement and the reopening of the Strait of Hormuz. We consider this move premature. The structural drivers beneath the surface point in the opposite direction, and the thesis of a quick peace deal is considerably more fragile than the market is currently pricing in.
The Correction in Numbers
On May 20, Brent was still at $110.34. By May 25, prices plunged more than six percent in a single trading session. On May 26, the contract fluctuated between $96 and $97. WTI followed the pattern, falling to $91.39, while the Brent-WTI spread remained stable at around five dollars. Within four weeks, Brent thus lost 5.18 percent, yet on a twelve-month basis it remained one of the strongest performers in the commodities sector at plus 49.42 percent.
The trigger was clear: President Trump announced on Saturday that the agreement with Iran was "largely negotiated." The market interpreted this as an immediate path to reopening the Strait of Hormuz, through which roughly one-fifth of global oil and LNG trade normally flows. The risk premium was quickly priced out.
What Markets Are Overlooking
Three factors are currently being underestimated.
First: The deal is not closed. Trump himself confirmed on Monday that the U.S. blockade of the Strait of Hormuz remains in place until a formal agreement exists. Iran's semi-official Fars agency simultaneously stated that the country had committed to no handover of nuclear stockpiles, no closure of facilities, and no renunciation of nuclear weapons. Both sides are describing the same piece of paper in incompatible terms.
Second: Active military operations continue. On May 25, U.S. Central Command struck Iranian missile positions and ships allegedly laying mines. These actions occurred during the officially existing ceasefire. Anyone seeing an agreement "in its final stages" should be able to explain why bombardments are happening simultaneously.
Third: The supply situation has not improved. Even if the Strait of Hormuz were fully reopened tomorrow, according to Wood Mackenzie estimates, approximately two million barrels per day of offshore production in the region remain shut down. A complete return to pre-war levels is not expected before the end of Q3 2026. Investment bank Goldman Sachs has already pushed back its expectation for Hormuz normalization from mid-May to late June — and that was before the latest escalations.
We have separately documented our assessment of the U.S.-Iran negotiation status and conclude there that a comprehensive agreement in 2026 is unlikely. If this assessment holds, the current Brent correction is fundamentally unjustified.
The Structural Break: UAE Leaves OPEC+
A second development that the market is not adequately pricing in: The United Arab Emirates left OPEC and the OPEC+ alliance as of May 1, 2026. This ends nearly six decades of membership for the region's second-most important producing country after Saudi Arabia.
The immediate consequence: OPEC's share of global production falls below 30 percent for the first time in the organization's history. In the 1970s, this share was still above 50 percent. The UAE reserves the right to expand production capacity independently of quota agreements — a medium-term capacity target of six million barrels per day is being discussed, though not before 2030.
In the short term, the impact of this break is muted — production cannot be ramped up from nothing, and ongoing Hormuz restrictions limit exports anyway. In the medium term, however, the UAE exit signals a fundamental shift in global energy governance. If other members follow, a market share battle looms that could push oil prices down long-term. Short-term scarcity and long-term capacity expansion are working in opposite directions.
What Analyst Houses Are Saying
The major banks have updated their May forecasts and are predominantly well above the current spot price.
| Institution | Forecast | Details |
|---|---|---|
| Goldman Sachs | $90 (Q4 2026) | Raised from previous $83 |
| Barclays | $100 (2026 Average) | $110 in Hormuz disruption scenario |
| Morgan Stanley | $110 (Q2), $100 (Q3) | Unchanged |
| JPMorgan | $60 (2026 Average) | Outlier — soft demand thesis |
The notable outlier is JPMorgan: The bank sees Brent averaging only $60 in 2026. Rationale: soft demand fundamentals, an anticipated easing of Iran tensions, and the expectation that potential U.S. military actions would explicitly spare Iran's oil infrastructure. This thesis has lost credibility over the past three months — actual operations have indeed struck Iranian energy facilities.
The majority consensus for 2026 clusters in the $90 to $105 corridor, with upside risks in case of sustained Hormuz crisis.
Our Outlook: Bullish in Consensus, Neutral Short-Term
The tactical setup suggests consolidation in the $92 to $105 range over the coming two to three weeks. Once it becomes apparent that the Iran memorandum will not lead to a binding agreement — which is our base case — we see the path back to the $108 to $115 range.
Triggers for upward movement would be:
- Resumption of intensive U.S. operations
- An official breach of the ceasefire
- An Iranian attack on energy infrastructure in Gulf states
- Clarification from Trump about the failure of negotiations
Triggers for further downward movement would be:
- Actual Hormuz reopening
- A binding memorandum with verification mechanism
- A significant OPEC+ response to the UAE exit through output increases
For the trading week of May 25–31, the Brent price remains closely tied to Iran headlines. Below $95, a test of the $92 level would be likely. Above $100 opens the path back to the $105 to $110 corridor.
Our call for Q2/Q3 2026: bullish on Brent versus the current spot. We see the 2026 annual average in the $95 to $105 range, with significant upside risk if Iran negotiations fail. We consider JPM's thesis of $60 Brent to be out of touch with current supply and geopolitical realities.
This analysis represents an editorial market assessment by the BrokersRoom Research Desk and does not constitute individual investment advice within the meaning of § 85 WpHG or analogous legislation. Trading commodities, CFDs, and currencies involves significant risk of loss. Past performance is not indicative of future results. Data sources: Fortune, TradingEconomics, Capital.com, Reuters, Wood Mackenzie, Goldman Sachs, Barclays, Morgan Stanley, JPMorgan Global Research, Gulf News, Middle East Institute. As of May 26, 2026.
