Brent: Consolidation near recent lows – BBH

Brown Brothers Harriman's (BBH) Elias Haddad notes Brent crude Oil is consolidating around $96 per barrel after recent declines, with broader risk assets pausing their rally. The bank highlights that market focus is on whether US-Iran diplomacy can secure safe navigation through the Strait of Hormuz. BBH also references IMF downside scenarios where higher Oil prices in 2026 would significantly cut global GDP growth.

Oil steadies as markets eye diplomacy

"Brent crude oil prices are consolidating near yesterday’s lows around $96 a barrel. The rally in stocks and bonds paused, while the dollar’s decline stabilized. Hopes for a diplomatic off-ramp to the US-Iran war continues to support the recovery in financial market sentiment. The US and Iran are looking to arrange a second round of peace talks in the coming days. Despite the encouraging news headlines, we are under no illusion that the conflict itself may continue indefinitely."

"Regardless, for markets the key issue is not the war’s duration but whether both countries can reach a deal that will no longer impede freedom of navigation for vessels transiting the Strait of Hormuz. We are sympathetic to the US “Open for All or Closed to All” approach because shared economic pain is more likely to accelerate a reopening of the Strait."

"The IMF published yesterday its World Economic Outlook titled: Global Economy in the shadow of War. As they previously flagged, the IMF downgraded global GDP growth by 0.2pts to 3.1% in 2026 and stressed that “risks are firmly on the downside.”"

"The IMF considered two downside scenarios: (i) Adverse scenario. Assumes crude oil prices average $100 per barrel in 2026. Global growth would be reduced by 0.8pts to 2.5% in 2026. (ii) Severe scenario. Assumes crude oil prices average $110 per barrel in 2026. Global growth would be reduced by 1.3pts to 1.8% in 2026, indicative of a global recession (growth rate below 2%)."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)