Morgan Stanley Boosts Brent Crude Price Forecasts Amid Middle East Supply Woes
Morgan Stanley has revised its Brent crude price forecasts higher due to slower-than-expected Middle East supply recovery. The bank now expects oil prices to peak at $100 per barrel in Q4 of 2026, up from its previous assumption of $75 for all quarters.
The bank's revised forecast is based on an assessment that the Middle East supply recovery will take longer than expected, leaving the market in deficit throughout Q4 and Q1 of 2027. Morgan Stanley notes that recent weeks have seen a sharp decline in oil-on-water inventory, while onshore inventories are also declining.
The bank's revised forecast for Brent crude prices is as follows: $90 per barrel in Q3 2026, $100 in Q4 2026, $95 in Q1 2027, and $90 in Q2 2027. Morgan Stanley highlights the unusual gap between crude and refined products, with the ICE gasoil contract trading near $175 a barrel against Brent at about $92.