Commerzbank sees only limited further downside potential in oil prices and does not expect a return toward pre-war levels until next year despite the preliminary agreement between the U.S. and Iran, according to a Tuesday note.
Even in the best-case scenario, in which the Strait of Hormuz is sustainably reopened, it is expected that shipping traffic and energy exports from the Gulf region will take some time to normalize again, the bank noted.
Some of the countries in the Gulf region can be expected to increase their production above pre-war levels in the medium to long term. This was already planned by members of the Organization of the Petroleum Exporting Countries, which, until recently, had been voluntarily curbing their production, the bank said.
Given the current level of demand, this would result in a substantial excess supply, which could push the oil price significantly lower. However, it cannot be assumed that countries with spare capacity will or are able to fully utilize it, according to Commerzbank.
Oil demand is also likely to be higher than before the outbreak of the war for a certain period, as many countries need to refill their oil reserves. As the demand-intensive season has begun and a rapid normalization of energy exports from the Gulf region is unlikely, inventories are likely to continue to fall in the coming months.
Commerzbank forecasts a Brent oil price of US$85/barrel even at the end of 2026 and does not expect a return toward $65/barrel until 2027.