BAKU, Azerbaijan, July 9. The International
Monetary Fund expects global oil prices to rebound strongly in 2026
before declining again in 2027, according to its latest World
Economic Outlook Update.


The IMF projects oil prices to increase by 31.8 percent in 2026,
following a 14.4 percent decline in 2025. The 2026 forecast is 10.4
percentage points higher than the projection published in the April
2026 World Economic Outlook, implying that the earlier forecast was
for a 21.4 percent increase.


For 2027, the IMF expects oil prices to decrease by 11.8
percent. This is 4.2 percentage points lower than the April
forecast, which implied a 7.6 percent decline.


The updated outlook therefore points to a much stronger rebound
in oil prices in 2026 than previously expected, followed by a
steeper correction in 2027.


“Commodity prices are still elevated, but ceasefires and a
memorandum of understanding between Iran and the United States have
cooled prices from their April 2026 peaks, in part by justifying
adjustment in inventories to tackle what are perceived to be
temporary shortfalls. Energy prices are roughly 25 percent higher
than prewar levels. The oil futures curve is in
backwardation—higher spot prices than futures—through the end of
2026, in line with supply disruptions and heightened geopolitical
risk. Even so, the curve implies an average petroleum spot price
index of $78 per barrel for 2026, compared with the $82 per barrel
assumed under the reference forecast in the April 2026 World
Economic Outlook (WEO) and $100 per barrel assumed under the April
adverse scenario,” said the IMF.


The analysts note that the relatively muted increase in global
oil prices reflects the fact that part of the decrease in oil flows
through the Strait of Hormuz has been compensated for by a drawdown
of inventories, containing the need for oil consumption and
production to adjust through prices.







Meanwhile, Jorge Leon, Head of Geopolitical Analysis at Rystad
Energy notes that tanker traffic through the Strait of Hormuz has
essentially stopped, which tells more about risk perception right
now than any statement from Washington or Tehran.


“Brent's climb to its highest level since 19 June shows how
quickly the market is pricing in a ceasefire the US president
himself says is over,” he noted.


Leon points out that the Strait of Hormuz ceasefire looks to be
over, with reported attacks on commercial vessels triggering a new
round of US retaliatory strikes overnight, and President Trump
himself declaring the truce ended.


“It’s unclear whether diplomatic channels remain open in
practice; the latest military exchanges raise the risk that talks
will either stall or continue under much more fragile conditions.
Fundamentally, the events of the last few days significantly weaken
any confidence that the current 60-day truce can still evolve into
a permanent peace agreement. Oil markets reacted quickly to the
renewed geopolitical risk, with Brent crude climbing to close to
$79 per barrel – its highest level since 19 June. The move
highlights how sensitive prices remain to any escalation around the
Strait, given its role as a critical transit route for global oil
flows,” he added.