Morgan Stanley Sticks to Oil Price Forecasts Amid Strait of Hormuz Tensions

Morgan Stanley has maintained its oil price forecasts, predicting Brent crude will reach $110 per barrel in the second quarter of 2026 and decline to $80 a barrel by 2027. The bank's base-case scenario expects exports through the Strait of Hormuz to remain at low levels until October. In the meantime, oil prices have climbed above $100 per barrel as the U.S. Navy prepares to block ships to and from Iran via the strategic waterway.

The move by Washington has led to increased tensions with Tehran, potentially restricting Iranian oil exports. Meanwhile, Middle Eastern producers including Kuwait and Iraq have lifted Asia-bound official prices sharply for May. Saudi Arabia set a record premium of $19.50 a barrel to the Oman/Dubai average for its Arab Light crude.

Analysts expect the impact on global oil production to flip the market into a supply deficit this year, contrary to pre-conflict estimates of a comfortable oversupply.