Brent Settles at $85.21, Running 15 Percent Above EIA's July Baseline as Iran Truce Collapses

Brent crude settled at $85.21 per barrel on Monday, according to ICE market data reported by OilPrice.com. That settlement sits $11.21 per barrel above the EIA's short-term baseline of $74 per barrel for the third quarter of 2026. The EIA published that forecast on July 7, explicitly assuming that the Strait of Hormuz would reopen following the June 18 U.S.-Iran memorandum of understanding.

The June 18 Iran Memorandum That Anchored EIA's $74 Brent Baseline

The June 18 agreement between U.S. and Iranian officials was a memorandum of understanding aimed at restoring Hormuz transit. The EIA treated that agreement as the primary driver of downward price pressure in its July 7 forecast. Under the EIA's scenario, crude production shut-ins were expected to decline from 11.2 million barrels per day in May 2026 to 1.4 million barrels per day by the fourth quarter of 2026, per the STEO.

The July STEO also projected Brent averaging $70 per barrel in the fourth quarter of 2026 and $65 per barrel through 2027. Those projections represented a $27 per barrel reduction from the prior month's outlook for 2026. The scenario assumed that most crude oil production would return to near pre-conflict levels by year-end.

What Has Changed Since the EIA's July 7 Forecast

Iran struck two ADNOC tankers transiting the Strait of Hormuz with cruise missiles, resulting in one fatality, according to OilPrice.com on July 14. The Trump administration subsequently reinstated a blockade of Iranian shipping through the Gulf of Oman. U.S. gasoline prices rose for the first time since May 2026, reversing months of decline, per OilPrice.com.

These developments directly undercut two of the EIA's foundational assumptions: that Hormuz transit would normalize and that production shut-ins would rapidly decline. The production shut-ins that the EIA expected to fall to 1.4 million barrels per day by late 2026 remain materially higher. The EIA's next STEO, due in August, will require upward revision to Brent if Hormuz disruptions persist.

Goldman's Month-by-Month Delay Formula and the Range Between $80 and $130

Goldman Sachs set its fourth-quarter Brent baseline at $80 per barrel, contingent on Hormuz reopening by the end of July 2026, as Oil Authority reported on July 12. The bank's sensitivity formula adds $10 per barrel to Brent fair value for each additional month of Persian Gulf supply normalization delay past that end-of-July base case. With the ceasefire now collapsed, the delay clock has reset.

Oil Authority calculation: if Persian Gulf normalization is delayed three months past Goldman's end-of-July baseline, Goldman's formula yields a fair value of $110 per barrel. A six-month delay aligns with Goldman's stated $130 upside scenario. At Monday's $85.21 settlement, the market is pricing in slightly more than half a month of delay from Goldman's $80 base case.

WTI at $79.64 and the U.S. Production Position

WTI crude settled at $79.64 per barrel on Monday, a gain of $1.50 or 1.92 percent on the day, according to CME data cited by OilPrice.com. The Brent-to-WTI spread held at $5.57 per barrel. The EIA's July STEO projects U.S. crude oil production at 13.8 million barrels per day for 2026 and 14.0 million barrels per day for 2027.

Record U.S. output at 13.8 million barrels per day, combined with elevated crude prices, supports revenue across the American shale sector. U.S. petroleum exports have surged to record levels as markets redirect supply away from the Persian Gulf, according to OilPrice.com. The next concrete data point for crude pricing will be the EIA's weekly petroleum inventory report, scheduled for release on July 15.