Morgan Stanley and Goldman Sachs cut their forecast for oil prices towards the end of the year and 2027 following developments in the peace negotiations between the United States and Iran earlier this week.
Morgan Stanley now sees Brent crude averaging $80 per barrel in the last quarter of 2026, and $90 per barrel in the third quarter, Bloomberg reported, citing a note from the bank’s commodity team. Morgan Stanley’s earlier forecast was for an average of $100 per barrel of Brent in the third quarter, while the fourth-quarter price forecast was unchanged.
“Much is still to be negotiated, and key risks remain, but for now, this is a key step towards a de-escalation of the conflict and higher oil exports via the Strait of Hormuz,” the analysts said, expecting a speedy recovery in tanker flows once the strait is reopened.
Goldman Sachs, meanwhile, cut its price forecast for the fourth quarter to $80 per barrel from $90 per barrel, and the 2027 average forecast for Brent crude to $75 per barrel from $80 in earlier forecasts. According to the bank’s commodity analysts, tanker traffic via the Strait of Hormuz would recover fully by the end of July.
Citi is even more bearish than its peers on oil prices. On Monday, the bank cut its oil price forecast to $75 per barrel of Brent in the third quarter of this year, falling further to an average of $70 per barrel in the final quarter. For 2027, Citi expects an average Brent price of $65 per barrel. That’s down from an earlier 2027 forecast of $80 per barrel of Brent.
The international benchmark earlier this week fell to the lowest since early March following the news of a preliminary peace deal between Washington and Tehran. Set to be signed on Friday in Switzerland, the deal will see Iran reopen Hormuz within 30 days.
Brent dropped below $90 per barrel on the news earlier today, extending the loss to trade at $82.51 per barrel at the time of writing. WTI was trading at $80.23 per barrel.
By Irina Slav for Oilprice.com
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The Bank of Japan joined other major global central banks in raising interest rates to head off an expected spike in inflation fueled by higher energy costs from the war in the Middle East.
The bank said on Tuesday that it would raise its benchmark interest rate a quarter of a percentage point to 1 percent — the highest level in 31 years. Citing inflationary pressures from rising crude oil prices, the central bank said it would continue raising interest rates while monitoring prices and the broader economy.
Japan, along with much of the rest of the world, is bracing for a surge in prices for oil, gas, and other commodities driven by the closure of the Strait of Hormuz. An agreement between the United States and Iran to reopen the strait will likely provide relief. Still, economists expect war-related pressures to show up in Japan’s pricing data already this month, and lingering supply-chain strains and higher inflation to persist through the end of the year.
The strategy is to get ahead of the coming price surge, drawing lessons from 2022, when Russia’s invasion of Ukraine caused the last major disruption to global energy flows. At the time, the European Central Bank initially described inflation as “transitory” and delayed raising rates, only to see eurozone inflation shoot past 10 percent.

NEW YORK (AP) — A tentative deal to end the Iran war makes it reasonable to ask how soon prices will drop for gasoline, groceries, airline tickets and other items that got more expensive during the conflict.
Not so fast, experts say.
Even after oil starts flowing again from the Middle East, it could take a while for consumers to see a difference at local fuel pumps, supermarkets and other places they shop, according to economists and industry analysts.
Fighting over the Strait of Hormuz disrupted not only supplies of crude and refined fuel but also the supply chains for fertilizer, food and even footwear. Businesses expect higher costs to linger, which means their customers might need to prepare for that too.
“It is not clear, despite three months of war, that anything has been achieved that makes the American consumer better off,” Brett House, an economist who teaches at Columbia Business School, said. “In fact, by almost any measure, not just the American consumer, but the world, is worse off as a result of this attack.”
If the deal between the U.S. and Iran holds, here’s how experts see the war’s effects receding — or not — in the weeks ahead:
US motorists can expect some gas price relief
Following news of the tentative agreement, oil prices fell Monday to about $80 for a barrel of U.S. benchmark crude. That compares to $67 per barrel before the war and the price of over $120 a barrel reached earlier in the conflict.
Refineries typically pay for crude oil a month or more in advance, so even after oil prices drop, they won’t immediately be processing cheaper products.
“The tendency of gasoline prices to fall slowly is partly because the raw material takes weeks to work through the system until it’s delivered to consumers,” said Michael Lynch, a distinguished fellow at the nonpartisan Energy Policy Research Foundation.
In places without enough refining capacity to meet their needs, such as the West Coast of the U.S., gas prices will take longer to drop, said Mark Barteau, a professor of chemical engineering and chemistry at Texas A&M University.
In some Asian and African countries that rely more on oil from the Middle East, the supply shock led to school and government office closures and instructions to work from home, according to the International Energy Agency.
“The bottom line is that getting back to ‘normal’ will be a lengthy process involving many parties and countries,” Barteau said. “Getting an agreement between the U.S. and Iran to open the strait is just the beginning.”
Flights won’t get cheaper right away
Industry experts have spent months warning that even if the war ended, travelers should not expect airfares to go down immediately.
Airlines typically buy fuel in advance, adjust their schedules gradually and price tickets based heavily on demand, meaning lower oil and jet fuel prices can take weeks or months to get factored into the cost of commercial flights.
“I think it’s unlikely that we’re going to see a retreat or reduction in the cost of flying at any point this summer,” Columbia’s House said.
Fuel surcharges that some airlines outside the U.S. added are one of the first areas where passengers might get a reprieve, said Gordon Ho, a professor at the University of Southern California’s business school.
“Consumers are going to say, ‘Wait a minute, why are you still charging me a fuel surcharge?’” Ho said.
Pressure on grocery prices will likely continue
Reopening the strait is unlikely to deliver instant relief at the grocery store, according to David Ortega, a professor of food economics and policy at Michigan State University.
Fuel accounts for roughly 15% to 30% of the total cost of food, according to the Independent Grocers Alliance, a grouping of 7,500 global supermarkets.
But it can take months for an energy shock like the one caused by the Iran war to wind through the food supply chain and raise grocery prices. And once prices go up, it takes them a long time to come back down, especially when the future is unpredictable, Ortega said.
“We’re likely still looking at inflationary pressure on food in the coming months,” Ortega said. “There’s still a good deal of uncertainty about how the reopening will unfold, and it will take time for fuel, diesel and retail fertilizer prices to come back down.”
Rabobank, which is based in the Netherlands, said it expected war-related food price inflation to peak sometime next year in Europe. In the U.S., grocery prices are expected to rise 3.2% this year, which compares to a historical average of 2.6%, according to the U.S. Department of Agriculture.
Farmers remain strapped for fertilizer
Reopening the Strait of Hormuz would also be a welcome change for farmers and the production of food globally. Roughly 30% of the world’s fertilizer passed through the waterway before the war began. Prices soared as the supply was effectively cut off, and shipments probably will take a long time to return to pre-war levels.
The consequences of the shortage facing farmers now may only intensify down the road, regardless.
Many farmers around the world are going through planting seasons without the fertilizer they need or paying sky-high prices for both fertilizer and fuel needed to produce and transport their products. The World Food Program of the United Nations expects this to have a “devastating impact” on crop yields — and consequently, food prices and the availability of food — for months to come.
Retailers don’t anticipate a cost reprieve
U.S. retailers that sell shoes were encouraged to see falling gasoline prices, hoping they would mean Americans have more money to spend on back-to-school shopping, said Andy Polk, senior vice president of the Footwear Distributors and Retailers of America trade group.
However, shoe companies anticipate their own costs staying higher for the foreseeable future, Polk said. The group’s members keep a two- to three-month inventory of finished products, but their next orders may include suppliers charging more for materials, he said.
Most of the footwear sold in the U.S. is imported, and Polk said he expects shipping costs to remain higher for the rest of 2026 and 2027.
U.S. tariffs imposed last year have made it more difficult for shoe sellers to absorb higher costs or pass them on customers, he said. In May, footwear prices were 5.2% higher than the same month a year earlier, according to government figures.
Shipping industry expects a slow recovery
Judah Levine, head of research at the freight booking platform Freightos, said the Straight of Hormuz closure has affected about 2% to 3 % of the total volume of container ships that are used for global shipping, but higher oil prices and disruption have impacted the shipping industry more broadly.
Josh Steinitz, chief strategy officer of the business logistics platform ShipStation Global, said consumers might notice higher shipping costs and more out-of-stock items online until the end of the year.
“I think fuel surcharges, which then flow into shipping costs, which then get passed along to consumers, are still going to be with us for quite sometime from many of the major carriers,” Steinitz said.
___
Associated Press writers Cathy Bussewitz, Anne D’Innocenzio, and Wyatte Grantham-Philips in New York, Dee-Ann Durbin in Detroit and Rio Yamat in Las Vegas contributed to this report.

China’s consumer spending slowdown deepened in May as retail sales unexpectedly fell from a year earlier, in the latest sign that the country’s housing market crash has left millions of families reluctant to spend.
Retail sales dropped 0.6 percent in May from the same month a year earlier, the National Bureau of Statistics said on Tuesday. It was the first year-over-year decline since December 2022, when a wave of coronavirus infections swept the country and kept consumers at home after Beijing abruptly dismantled its stringent “Covid zero” restrictions.
Last month’s decline was a surprise because higher energy costs were expected to help lift retail sales. Gasoline sales, which are included in the retail sales figures, have risen as fuel costs increased following the closure of the Strait of Hormuz, and the retail sales figures are not adjusted for inflation. Yet retail sales still fell. After accounting for rising consumer prices, the decline in spending would have been steeper.

Soundtrack: In Flames – Colony
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Today, I can exclusively report, based on audited financial documents viewed by this publication that have been independently verified by the Financial Times, that OpenAI lost around $38.5 billion in 2025, as well as other crucial details about the financial condition of the company.
Due to the seriousness of this story, I am not going to do very much editorializing, as the numbers speak for themselves.
OpenAI Lost $5.09 Billion In 2024
2024 — OpenAI Had $3.7 Billion In Revenue, $12.4 Billion In Costs and Expenses, and a net loss attributable to the company of $5.09 Billion.
OpenAI’s financial statements tell the story of a company with incredible losses.
Revenue: $3.7 billion
Cost of Revenue: $2.65 billion
Research and Development: $7.81 billion
Sales and Marketing: $1.11 billion
General and Administrative: $907 Million
Total Costs and Expenses: $12.48 billion
Loss from Operations: $8.78 billion
Additional factors – including interest income and interest expense – left it with a net loss of $8.84 billion. It then marked $3.74 billion of losses as “net loss attributable to noncontrolling members capital,” leaving the net loss attributable to the company as $5.09 billion.
It’s unclear what this means, nor how OpenAI reconciled the removal of $3.74 billion in costs. I will not speculate further.
OpenAI Lost $38.5 Billion In 2025
2025 — OpenAI Had $13.07 Billion In Revenue, $34 Billion In Costs and Expenses, and $20.92 Billion In Losses, with a net loss attributable to the company of $38.53 Billion
Revenue: $13.07 billion
Cost of Revenue: $7.5 billion
Research and Development: $19.18 billion
Sales and Marketing: $5.73 billion
General and Administrative: $1.57 Billion
Total Costs and Expenses: $34 billion
Loss from Operations: $20.92 billion
Please note that 2025 was the year that OpenAI converted from a non-profit to a for-profit entity, leading to a $41.55 billion loss due to changes in fair value of convertible interests and warrant liability.
Taking into account other minor factors like interest income and interest expense, OpenAI is left with a net loss of $60.35 billion, which it lowered to $38.53 billion by removing $17.87 billion in costs via that “net loss attributable to noncontrolling members capital” and another $3.95 billion via a “net loss attributable to redeemable noncontrolling interests.”
Ultimately, the net loss attributable to OpenAI in 2025 was $38.5 billion.
At the end of the year, OpenAI had just over $50 billion in assets, with almost half of that in cash.
OpenAI Was Paid $867 Million By SoftBank and $303 Million From Microsoft In 2025
In 2025, SoftBank paid OpenAI $867 million. Microsoft paid it $303 million.
The documents revealed how much OpenAI paid Microsoft for services. In the 2025 calendar year, OpenAI paid Microsoft $10.59 billion for “Research and development” expenses. We believe this most likely refers to the cost of training OpenAI’s models.
The documents also mention a $6.047 billion charge related to “cost of revenue,” a $527 million charge for sales and marketing, and $42 million in “general and administrative expenses.” In total, OpenAI’s expenses to Microsoft amounted to $17.2 billion.
According to the figures, OpenAI had liabilities to Microsoft of $3.64 billion at the close of the calendar year, and additional $21 million in “accrued expenses and other current liabilities.” The documents also mention a further $58 million in non-current liabilities.
Further Notes
I intend to follow up this story in the next month with more in-depth reporting related to the documents. The documents are detailed, and I need time to fully parse them. Once I have done so, you’ll know.
The financial condition of OpenAI is deeply concerning. $38.53 billion in losses are astronomical, and far higher than most believed it would be. Losses also appear to be mounting year-over-year at a dramatic rate, and I’m not sure how this company finds a way toward any kind of sustainability or profitability.
As discussed, I have not editorialized much today. I believe the best thing I can do for the general public is to deliver this news as plainly as possible.