Morgan Stanley Sees Brent Crude Hitting $100 as Oil Market Tightens

Morgan Stanley has upgraded its Brent crude forecast to $100 per barrel in the fourth quarter of 2026, citing a slower-than-expected recovery in Middle East supply. The bank now expects Brent to average around $90 per barrel in the third quarter of 2026, before peaking near $100 in the fourth quarter, then easing to about $95 in the first quarter of 2027 and $90 in the second quarter.

The revision reflects a market tightening faster than anticipated. Oil-on-water has fallen by roughly 170 million barrels since mid-July, with onshore inventories, including in China, also declining. Middle East exports have retreated toward levels last seen in March and April.

Morgan Stanley's chief US equity strategist, Michael Wilson, warns that a renewed spike in oil prices is the single biggest risk facing US stocks. He recommends using energy shares to hedge broader portfolios, citing the potential for higher bond yields and pressure on the Federal Reserve to respond.