Morgan Stanley Cuts Brent Crude Price Outlook, Warns of 2027 Oil Surplus
Morgan Stanley Revises Oil Price Forecasts Amid Changing Market Dynamics
Bank Lowers Brent Crude Price Projections
June 30 (Reuters) - Morgan Stanley lowered its Brent crude price forecast for the rest of the year and next, citing a faster-than-expected reopening of the Strait of Hormuz, and said market focus has shifted back to a larger surplus expected in 2027.
• The bank lowered its third-quarter 2026 forecast and fourth-quarter 2026 view to $75 per barrel from earlier estimates of $90 and $80, respectively. It sees Brent at $75/bbl in the first half of 2027 and $70/bbl in the second half, compared with an earlier forecast of $80.
Middle East Exports and Market Surplus
• With the Middle East exports ramping up again, a supply shortfall that has been rapidly diminishing is now causing a surplus in the Brent and Dubai markets, the bank said in a note dated Monday.
• Morgan Stanley now projects an implied global oil market surplus of 4.8 million barrels per day (bpd) in 2027. At the start of 2026, before the conflict, its balances had pointed to a 2 million–3 million bpd surplus for the year and the closure of the Strait of Hormuz temporarily flipped that surplus into a deep deficit.
• To balance the market in 2027, flows through Hormuz only need to recover to 11 million-12 million bpd, or ~65% of the pre-conflict level, analysts at the bank estimated.
Impact of U.S.-Iran Agreement and Ongoing Negotiations
• This is the bank's second price reversion since the announcement of U.S.-Iran agreement to halt the war in Iran and open the Strait of Hormuz earlier this month.
• Iranian and U.S. negotiating teams were due in Doha this week, but Iran said on Monday no meeting had been scheduled as weekend missile fire from both sides tested the interim ceasefire to end the four-month-old war.
Oil Price Movements and Market Trends
• Oil prices dipped on Tuesday and were poised for a third consecutive monthly decline, setting them for their worst quarter since early 2020.
• Brent August crude futures were down 0.9% at $72.47 a barrel, as of 0706 GMT, while U.S. West Texas Intermediate for August fell 0.5% to $70.24 a barrel. [O/R]
Brokerage Oil Price Forecasts Post U.S.-Iran Deal
The table below lists price forecasts after the U.S.-Iran peace deal announcement:
Summary of Brokerage Forecasts
Brokerage/Age Brent WTI Forecasts as of Price Targets
ncy
2026 2027 2026 2027
Morgan June 29, 2026 Lowers Q3 2026 and
Stanley Q4 2026 forecasts to
$75/bbl; Lowers
forecast from $80 to
$75/bbl for 1H27 to
$70/bbl in 2H27
Barclays $96 ($100 $85 ($88 $90 $82 June 26, 2026 Sees Brent at
previously) previously $100/bbl for Q3 2026
) and $95/bbl for Q4
2026
UBS June 25, 2026 Lowers Brent
forecasts to $85/bbl
for Q3, Q4 2026,
$80/bbl for Q1, Q2
2027
Macquarie $77.09 $64 $71.4 $60 June 24, 2026
($89.28 ($74.50 2 ($70.5
previously) previously ($82. 0
) 93 previo
previ usly)
ously
)
J.P. Morgan $85 ($96 - $80 459 June 24, 2026
previously) ($89 ($70
previ previo
ously usly)
)
Commerzbank June 19, 2026 Expects Brent to
trade at $80/bbl by
end-2026
ANZ June 19, 2026 Expects Brent to end
