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.
