The International Monetary Fund (IMF) said that oil prices are now just 3 per cent above the April baseline global growth projection that it based its calculations on. But while physical spot prices are still very volatile, global reserves are still declining.

Benchmark Brent crude futures prices have declined over the past few days to around $94.79 for August delivery on Thursday and $86.18 for December delivery. The 2026 real GDP growth projection of 3.1 per cent for the global economy in the World Economic Outlook (WEO) “reference forecast” released by the IMF in April was drawn from an average oil price of $82.22 per barrel for 2026.

Knowledge and assumptions about geopolitical risks and scenarios

The forecast was made in April after prices jumped up in March and was based on a rapid conclusion to the conflict, which would see prices drop to approximately $76 for 2027. On the exact date that the forecast was released, Brent crude was trading at $94.80.

The reopening of the Strait of Hormuz is crucial to maintaining oil price stability, but the IMF’s reference forecast would not be confirmed, said Julie Kozack, the IMF spokesperson, at a regular news briefing. Previously, Kozack and other IMF officials noted that due to the prolonged conflict, the global economy was moving into the IMF’s “adverse scenario,” which could see global growth fall to 2.5 per cent this year.

Focus on spot prices ahead of July update 

The track and cost of oil will be strongly linked to geopolitical developments over the next few months, and the IMF will closely follow the length of the war and the condition of vital shipping lines.

The spot price is up, and now is above futures prices, which is what the IMF normally relies on when making its projections, Kozack explained. That will therefore be a factor the IMF considers in its next official forecast of global growth in July.

2 million barrel drop

The world’s oil market is in a tight balance right now as demand growth slows and supply declines are creating new dynamics in oil prices. 

While physically tighter oil markets will certainly cool demand, it will do so partially through demand destruction, thanks to higher prices, noted Goldman Sachs commodity analysts earlier in June.

This loss of demand, they estimate, reached 2 million barrels per day in May, as a result of sales in China and Western Europe. As a result, Goldman Sachs has assigned a $10 negative outlook for the fourth-quarter price of Brent crude, based on a neutral $90 price. Moreover, Chinese oil imports will remain at their lowest level since the 2020 lockdowns and will thus have a long-term cooling effect, according to Energy Aspects.

At the same time, there are significant upward risks in prices from extreme geopolitical volatility. The market recovered from a low six weeks ago when it was widely hoped that a ceasefire would last between the U.S. and Iran, but the market has bounced back because of concerns about Middle East tensions. The market for the paper is volatile and in conflict with predictions of physical shortages in the near weeks from executives at Exxon and Chevron. Finally, the market is exposed to “significant upside price risks due to the potential for more extended Mideast supply losses and meaningful price downside due to reduced demand.”