The price of benchmark Brent crude has fallen below $83 per barrel following the news of a peace deal between the US and Iran. The purpose of this agreement is to achieve ceasefire and reopening of the Strait of Hormuz. Similarly, US WTI crude is also trading around $81. Meanwhile, global brokerage firms Morgan Stanley and Goldman Sachs have reduced their estimates of crude oil prices to $80 per barrel, according to a Bloomberg report. An interim peace agreement between the US and Iran is to be signed in Switzerland next Friday (June 19). These major financial institutions released their reports on crude oil prices after the resumption of shipping traffic through the Strait of Hormuz.
Normalizing global oil and gas supplies through the Strait of Hormuz and a peace deal ending the long-running US-Iran standoff are expected to reduce global uncertainty over energy supplies. As a result, these banks have significantly revised their previous estimates.
What is Goldman Sachs’ stance?
Goldman Sachs has reduced its Brent crude price forecast for the fourth quarter of fiscal year 2026 from $90 per barrel to $80 per barrel. In addition, it has also reduced its average forecast for 2027 from $80 per barrel to $75 per barrel.
What did Morgan Stanley say?
In its report, Morgan Stanley also reduced its Brent crude price forecast for the fourth quarter (Q4) by $15 to $80 per barrel; In an environment of war and uncertainty, the earlier estimate was $95 per barrel. The estimate for the third quarter (Q3) has been reduced by $10 to $90 per barrel from $100 per barrel.
Why is this estimate important for India?
India imports more than 85% of its crude oil needs. As a result, if crude oil prices fall to $80 per barrel, India’s import bill will reduce. India spends a large part of its foreign exchange reserves to pay for imported crude oil; Rising prices put pressure on the rupee, which increases inflation and increases the current account deficit.
Due to the recent rise in crude oil prices, petrol and diesel prices have increased by about ₹7.50 across the country. Due to this, the cost of logistics and transportation as well as production has increased, resulting in increased prices of various commodities.
