Morgan Stanley Cuts Brent Crude Forecasts To $80 on Hormuz Agreement

Morgan Stanley has significantly lowered its oil price forecasts for the coming quarters after an interim agreement between the United States and Iran paved the way for the reopening of the Strait of Hormuz, a critical global energy transit route. The investment bank said the development is expected to accelerate the return of Middle Eastern oil supplies to international markets, easing concerns about prolonged disruptions and reducing upward pressure on crude prices.

According to a research note dated June 15, Morgan Stanley now expects Dated Brent crude, a key benchmark for physical oil transactions, to average $90 per barrel during the third quarter of 2026. This marks a sharp reduction from its previous forecast of $100 per barrel. The bank also cut its forecast for the fourth quarter to $80 per barrel, representing a $15 decrease from earlier estimates. Analysts said the expected recovery in regional oil output has been brought forward by one to two weeks.

The revised outlook follows an interim agreement between Washington and Tehran that is expected to be formally signed in Switzerland later this week. While several aspects of the arrangement remain under negotiation, Morgan Stanley analysts described the deal as an important step toward de-escalating tensions in the region and restoring oil exports through the Strait of Hormuz, one of the world's most strategically significant shipping corridors.

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Oil prices have already reacted to the announcement, falling to their lowest levels since early March. However, uncertainty remains over the implementation of the agreement, as the full text has not yet been released. Traders, shipping companies and oil producers continue to assess how the reopening process will unfold and how quickly normal transit operations can resume.

Morgan Stanley cautioned that restoring tanker traffic through the waterway could take several weeks. Analysts noted that sea mines will need to be cleared, insurers and shipowners must regain confidence in the route, and vessels previously relocated from the region will need to return. These logistical challenges are expected to slow the pace of recovery despite the political breakthrough.

The bank further stated that oil production is likely to begin ramping up from mid-July. It estimates that approximately 50% of the lost output could be restored by September and around 80% by December, with the remaining production expected to return during early 2027. The projected increase in supply is expected to play a key role in stabilizing global oil markets and easing concerns about energy availability in the months ahead.

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