In a report sent to Rigzone this week by Natasha Kaneva, J.P. Morgan’s head of global commodities strategy, J.P. Morgan warned that Brent could average as much as $151 per barrel in the fourth quarter of this year if the Strait of Hormuz reopens on September 1.
This figure was the highest in a table of J.P. Morgan Brent price forecasts under alternative Strait of Hormuz reopening timelines, which predicted quarterly and annual Brent prices for 2026 and 2027 in scenarios where Hormuz opens up in mid-May, June 1, July 1, August 1, and September 1.
Under a mid-May reopening scenario, Brent would average $101 per barrel in the second quarter, $96 per barrel in the third quarter, $89 per barrel in the fourth quarter, and $91 per barrel overall in 2026, according to the table. In a June 1 reopening scenario, which J.P. Morgan highlighted is its base view, Brent would average $103 per barrel in the second quarter, $104 per barrel in the third quarter, $98 per barrel in the fourth quarter, and $96 per barrel overall in 2026, the table showed. A July 1 reopening scenario would see Brent average $104 per barrel in the second quarter, $116 per barrel in the third quarter, $117 per barrel in the fourth quarter, and $104 per barrel overall in 2026, the table projected.
In an August 1 reopening scenario, J.P. Morgan projected that the Brent price would come in at $104 per barrel in the second quarter, $123 per barrel in the third quarter, $134 per barrel in the fourth quarter, and $110 per barrel overall in 2026. Under a September 1 reopening scenario, J.P. Morgan sees Brent averaging $104 per barrel in the second quarter, $127 per barrel in the third quarter, $151 per barrel in the fourth quarter, and $115 per barrel overall in 2026, the table revealed.
Looking at 2027, the table predicted that, under a mid-May reopening scenario, Brent would average $80 per barrel in the first quarter, $75 per barrel in the second quarter, $67 per barrel in the third quarter, $63 per barrel in the fourth quarter, and $71 per barrel overall next year. In a June 1 reopening scenario, Brent would average $85 per barrel in the first quarter of next year, $79 per barrel in the second quarter, $69 per barrel in the third quarter, $65 per barrel in the fourth quarter, and $75 per barrel overall in 2027, the table revealed. A July 1 reopening scenario would see Brent come in at $105 per barrel in the first quarter, $98 per barrel in the second quarter, $87 per barrel in the third quarter, $81 per barrel in the fourth quarter, and $93 per barrel overall in 2027, the table highlighted.
In an August 1 reopening scenario, J.P. Morgan projected that the Brent price would come in at $125 per barrel in the first quarter of 2027, $119 per barrel in the second quarter, $107 per barrel in the third quarter, $100 per barrel in the fourth quarter, and $113 per barrel overall in 2027. Under a September 1 reopening scenario, J.P. Morgan sees Brent averaging $147 per barrel in the first quarter of 2027, $140 per barrel in the second quarter, $125 per barrel in the third quarter, $116 per barrel in the fourth quarter, and $132 per barrel overall in 2027, the table revealed.
“Even if the Strait reopens in June, the seasonal lift in summer demand, combined with the exceptionally large commercial stock draws seen in March and April, and likely again in May, should push OECD inventories toward operational stress levels by August,” J.P. Morgan analysts, including Kaneva, warned in the report.
“This is what keeps crude prices elevated in the low $100s through most of the year, rather than allowing a sharp retracement once Hormuz reopens,” they added.
“Looking into 2027, with the Strait reopened, producers in the Persian Gulf would have strong incentives to maximize output to recoup lost revenues,” they went on to state.
“Given the high price environment of 2026, other producers are likewise inclined to run at capacity, pushing the market into meaningful oversupply beginning in September 2026. By early 2027, we expect OECD commercial inventories to normalize back toward pre-war levels, putting sustained downward pressure on prices,” they continued.
Scarring
In the report, the J.P. Morgan analysts asked if there is a risk of long term “scarring” as a result of production shut-ins.
“A key question is whether prolonged shut-ins could translate into permanent production losses,” the analysts highlighted in the report.
Answering the question, the analysts revealed that their view is that these risks are likely overstated.
“Historical experience – including the Covid-era OPEC+ cuts, when producers collectively removed more than 10 million barrels per day – suggests that most production ultimately returned without major, lasting damage to reservoir performance,” the analysts said.
“In many cases, temporary shut-ins allow reservoir pressures to rebalance, which can support initial rates once wells are restarted,” they added.
The J.P. Morgan analysts warned that the more material risks are operational.
“Extended downtime can drive corrosion, scale buildup, or failures in artificial-lift systems such as ESPs,” they warned.
“In mature, low-rate wells, restarting a damaged pump can become uneconomic if replacement costs exceed the remaining value of the well,” they added.
The analysts pointed out, however, that this does not mean the oil is permanently lost underground.
“In most cases, ‘lost capacity’ reflects economics and restart costs rather than irreversible reservoir damage. Operators also have well-established mitigants – such as maintaining low flow rates instead of fully shutting in – which reduces the likelihood of these issues,” the analysts said.
The J.P. Morgan analysts noted in the report that, even if disruptions extend through late-September, they would expect aggregate long-term losses across the region to remain limited; “likely no more than 800,000 barrels per day”.
“And even that should be viewed as mostly recoverable over time rather than permanently destroyed capacity,” they added.
“Large-scale reservoir capacity is difficult to lose in the Gulf, where operators have decades of experience managing mature fields and temporary shut-ins,” they continued.
“Saudi Arabia and the UAE also retain substantial spare capacity, which could comfortably offset these volumes if needed,” they went on to state.
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