Brent Crude Falls to $71.99 Amid Hormuz Reopening, 31 Percent Below EIA June Forecast

ICE Brent futures for August 2026 delivery settled at $71.99 per barrel on Friday, down 7.1 percent for the five-day trading week. CME WTI closed at $69.23 per barrel, a 9.6 percent weekly decline and the lowest settlement since late February 2026. Western Canadian Select fell even harder, closing at $54.98 per barrel for a 14.2 percent weekly loss as Gulf heavy crude began re-entering Asian markets through a reopened Strait of Hormuz.

EIA June Forecast Rendered Obsolete in Six Days

The EIA released its June Short-Term Energy Outlook on June 9, 2026, forecasting Brent crude would average $105 per barrel across June and July. That forecast assumed the Strait of Hormuz would remain effectively closed in the near term, with oil shipments not resuming until the third quarter of 2026. Six days after the STEO was published, the US and Iran signed the Islamabad Memorandum, directly invalidating that central assumption. At Friday's close, Brent stood $33.01 per barrel below the EIA's June-July target, a gap of 31.4 percent achieved in under three weeks.

What the Islamabad Memorandum Covers

The US and Iran signed a 14-point memorandum of understanding between June 15 and 17, 2026, ending more than 100 days of conflict. Under the agreement, Washington lifted its naval blockade and waived oil sanctions on Iran, while Tehran committed to diluting its enriched uranium stockpile. A $300 billion regional reconstruction fund forms the economic centerpiece of the deal. A 60-day negotiation window covering Iran's nuclear program, final sanctions terms, and related issues opened simultaneously.

Saudi Arabia and Gulf Producers Move Quickly to Restore Volume

Saudi Arabia began loading tankers at its Ras Tanura terminal within days of the agreement, with Saudi Aramco targeting output of 10.29 million barrels per day. Persian Gulf exports recovered to 75 percent of prewar volumes by late June, with the UAE, Kuwait, and Qatar also expanding supply. OPEC+ producers had already agreed in May to add 188,000 barrels per day to collective output for June, a figure set before the Hormuz reopening created room to accelerate further. The Iran war had wiped out 7.88 million barrels per day of OPEC production in March, marking a 27 percent monthly decline; restoring even a fraction of that volume reshapes global balances.

Goldman Sachs Cuts Forecasts; Both Targets Still Above Friday Close

Goldman Sachs cut its fourth-quarter 2026 Brent forecast to $80 per barrel from $90, citing the earlier-than-expected Hormuz reopening. The bank also lowered its 2027 full-year Brent average to $75 per barrel from $80, noting that moving the supply normalization timeline forward by one month reduces fair value crude prices by $10 per barrel for near-term periods and $5 per barrel further out. Before the deal was announced, Goldman had warned that a sustained Hormuz closure through 2027 could push Brent above $130 per barrel in late 2026. Despite those downward revisions, both the Goldman Q4 2026 target of $80 and the EIA's June full-year 2026 Brent forecast of $95 per barrel remain above Friday's settlement of $71.99, implying the market has moved beyond analyst bases cases.

The 60-Day Window Leaves Prices Exposed to Reversal

The Islamabad Memorandum runs for 60 days, leaving final terms on Iran's nuclear program and sanctions relief unresolved until mid-August 2026. Goldman Sachs flagged three risks to the supply recovery: renewed hostilities, mine-clearing delays in Hormuz shipping lanes, and a breakdown in nuclear negotiations. A second Hormuz closure would, under Goldman's prior disruption scenario, push Brent above $130 per barrel in late 2026 and sustain a full-year average well above $100. Traders are pricing that optionality into a market that has fallen 33 percent in one month.

Canadian Heavy Oil Registers Steeper Weekly Loss

Western Canadian Select's 14.2 percent weekly decline outpaced WTI's 9.6 percent drop, widening the WCS-WTI differential to $14.25 per barrel at Friday's close. Before this week's price action, the differential had been running at $15.80 to $16.00 per barrel as Trans Mountain ran at full apportionment while Asian buyers turned to Canadian supply. The re-entry of Gulf heavy crude now competes directly with WCS barrels flowing through the Trans Mountain Expansion to Westridge Marine Terminal. The Alberta Energy Regulator's 2026 base-case differential forecast of $12 per barrel sits $2.25 below Friday's actual spread, reflecting a heavier competitive environment than the regulator's pre-conflict model assumed.