Morgan Stanley cuts oil price forecast for second time in two weeks

Morgan Stanley cuts Brent forecast on Hormuz reopening

Morgan Stanley lowered its oil price forecasts for the second time in nearly two weeks, citing a faster-than-expected resumption of oil flows through the Strait of Hormuz, alongside rising US supply and weak Chinese demand that increase the risk of a global supply surplus.

In a note, the bank's analysts forecast the average price of dated Brent crude, which reflects the value of physical cargoes loaded onto tankers, at $75 per barrel in both the third and fourth quarters of this year. This marks reductions of $15 and $5, respectively, from their previous forecasts.

The US bank also expects dated Brent to average $70 per barrel by the end of next year, Bloomberg reported.

The Strait is reopening faster than expected. However, the core fundamentals of stronger US exports and weaker Chinese imports remain intact. Looking ahead to 2027, the market is effectively back to where it started — facing a supply surplus, according to the note.

Morgan Stanley added that, for the oil market to balance next year, oil flows through the Strait of Hormuz would need to recover to only about 65% of their pre-conflict level, or roughly 11–12 million barrels per day.