Morgan Stanley has lowered its Brent crude oil price forecast for the remainder of 2026 and for 2027, citing a faster-than-expected recovery in oil flows through the Strait of Hormuz and a shift toward a more oversupplied global oil market.
According to the Reuters, key revisions include:
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- Q3 2026 Brent forecast: $75/bbl, down from $90/bbl.
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- Q4 2026 Brent forecast: $75/bbl, down from $80/bbl.
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- H1 2027 forecast: $75/bbl.
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- H2 2027 forecast: $70/bbl, down from its previous $80/bbl forecast.
Morgan Stanley said the downgrade reflects several factors:
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- Strait of Hormuz exports are recovering more quickly than expected, easing earlier supply concerns.
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- The bank believes the oil market is transitioning from a temporary supply deficit to a significant surplus, projecting an implied global oil surplus of about 4.8 million barrels per day in 2027.
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- Rising Middle Eastern exports, combined with strong U.S. production and relatively weak Chinese import demand, are reducing market tightness.
The revised outlook is consistent with a broader trend among major banks, several of which have recently lowered their oil price forecasts as geopolitical risks have eased and expectations of stronger future supply have increased.