Wall Street Warns of Oil Glut, Price Drop as Hormuz Reopens

Global oil prices are on track for a fourth consecutive weekly loss as the reopening of the Strait of Hormuz alleviates supply fears, according to reports from OilPrice.com. The bearish shift in market structure and stark warnings from Wall Street banks about a looming supply glut present a challenging price environment for North Dakota producers.

Brent crude prices have slumped to the low $70s per barrel, with West Texas Intermediate (WTI) trading below $70, nearing pre-war levels seen four months ago. The tentative reopening of the critical Middle Eastern shipping chokepoint and a U.S.-Iran memorandum of understanding have prompted hopes for a jump in immediate physical supply, OilPrice.com reported. The increase in flows is pressuring the front end of the Brent futures curve, which has moved further into contango, a market structure indicating eased concerns about immediate crude shortages.

Investment bank Citigroup is one of the most bearish voices, forecasting that Brent crude could plunge to as low as $60 per barrel by the end of the year. Citi analysts recommended selling any summer rallies, according to a note carried by Bloomberg. The bank expects traffic through the Strait of Hormuz to normalize and the U.S. and Iran to finalize a deal in the coming months, adding to a surge of prompt supply from the Middle East. Citi also noted that China’s crude buying remains weak and inventories have drawn far less than expected.

The outlook for 2027 appears even more oversupplied. Goldman Sachs expects a global oil surplus of about 3 million barrels per day next year, according to Samantha Dart, the bank's co-head of global commodities research. Dart told Bloomberg Television that while global strategic petroleum reserve (SPR) rebuilding could add over 1 million barrels per day of demand, it would still leave a surplus of nearly 2 million bpd. Other Wall Street banks, including Morgan Stanley, have also slashed price forecasts, anticipating the Hormuz reopening will accelerate a new supply glut.

In Asian energy markets, high prices are suppressing demand for a key Bakken byproduct: natural gas. Japan, the world's second-largest LNG buyer, reduced its liquefied natural gas imports by 7% year-over-year in the quarter to June, according to Bloomberg data cited by OilPrice.com. Japanese utilities generated 16% less power from gas in June 2026 compared to June 2025, switching to cheaper coal instead. The Asian spot price for LNG averaged $17.33 per million British thermal units in June, a level 70% higher than before the Middle East conflict began.

For Bakken operators, the combination of falling crude prices and weakened global gas demand underscores the need for rigorous cost management. The projected return of a massive supply surplus next year could test the economic resilience of wells across the Williston Basin.