Oil Market Reset: Post US-Iran MOU Outlook and Implications for Energy Markets

The global energy landscape has shifted significantly following the June 18 memorandum of understanding (MOU) between the United States and Iran. The agreement aims to end the recent conflict and reopen the Strait of Hormuz to increased traffic. At Gain Consulting, we have updated our forecasts to reflect this new reality, with meaningful implications for oil supply, inventories, crude and product prices, natural gas, and electricity markets.

Higher Oil Production on the Horizon

With the Strait of Hormuz reopening and trade flows normalizing, we now expect global crude oil production to return to near pre-conflict averages by the end of 2026. The majority of previously shut-in production is projected to come back online in the first quarter of 2027 (1Q27).

This accelerated supply recovery marks a clear departure from earlier, more cautious assumptions and sets the stage for a more balanced — and eventually oversupplied — global oil market.

Easing Inventory Pressure

As production ramps up, the pace of global oil inventory draws is slowing considerably. We forecast inventories will decline by approximately 2.2 million barrels per day (b/d) in 3Q26. This is a sharp reduction from the more than 7 million b/d draw we projected in our June outlook and the 5 million b/d draw seen in 2Q26.

Looking ahead to 2027, rising production is expected to push the market back into the pre-conflict state of oversupply, leading to inventory builds rather than draws. This transition will be a key driver of price dynamics in the coming quarters.

Downward Trajectory for Crude Oil Prices

The combination of rising supply expectations and moderating inventory draws has already weighed on oil prices. Brent crude averaged $85 per barrel in June — down $22/b from May and $32/b from its April 2026 peak.

Our updated forecast shows Brent averaging $74/b in 3Q26 (a $27/b reduction from last month’s outlook). With ongoing inventory accumulation expected over the next year, we see further downside, with Brent prices averaging $65/b in 2027.

Relief at the Pump for U.S. Drivers

Lower crude costs are translating into meaningful relief for U.S. consumers at the gas pump. We expect U.S. retail gasoline prices to average $3.80 per gallon in 3Q26, down from more than $4.20/gal in 2Q26.

In the near term, low gasoline inventories and elevated crack spreads will partially offset the crude-driven decline. However, as inventories rebuild and summer driving season winds down, crack spreads should narrow. This sets the stage for gasoline prices to fall to around $3.40/gal in 4Q26 and an annual average below $3.10/gal in 2027.

Natural Gas: Rising Demand Meets Strong Supply

On the natural gas side, we anticipate robust U.S. consumption growth. Natural gas use in the electric power sector is expected to reach a record high in 2027, supported by rising overall electricity demand, expansion of the natural gas-fired generating fleet, and relatively low prices. Overall U.S. natural gas demand is forecast to rise modestly in 2026 before increasing by about 3% in 2027.

Strong domestic production is keeping pace with this demand growth, resulting in moderate downward pressure on prices. Henry Hub spot prices are expected to average near $3.70 per MMBtu in 2026 before declining below $3.50/MMBtu in 2027.

Lower Wholesale Electricity Prices This Summer

The benefits of lower natural gas prices are flowing through to power markets. We forecast wholesale electricity prices this summer to be lower than last summer, primarily due to reduced natural gas costs delivered to power plants. Nationally, prices are expected to average around $45 per megawatthour (MWh), with the most significant declines in western hubs and the Midcontinent ISO region.

That said, heatwaves during peak summer demand could still trigger localized price spikes, underscoring the importance of flexible generation and grid reliability.

Strategic Implications for Energy Stakeholders

The post-MOU environment points to a period of increasing supply, easing price pressures, and greater market balance shifting toward oversupply in 2027. For producers, this environment will reward operational efficiency and cost discipline. For consumers and downstream sectors, it offers welcome relief on fuel and power costs.

For investors and policymakers, understanding the pace of supply recovery and inventory dynamics will be critical.

At Gain Consulting, our team continues to track these developments closely, providing clients with timely analysis, scenario modeling, and strategic guidance tailored to the evolving energy landscape.

Stay ahead of market shifts. Contact Gain Consulting today to learn how these forecasts could impact your operations, investments, or procurement strategies. Our experts are ready to help you navigate volatility and capitalize on emerging opportunities in oil, natural gas, and power markets.