Morgan Stanley Cuts Oil Price Forecast on Faster Hormuz Recovery, Weaker China Demand
Summary
- Morgan Stanley cut its global oil price outlook and forecast average Brent crude at $75 a barrel in the third quarter of this year.
- Morgan Stanley expects Brent crude to fall to $70 a barrel by the third quarter of next year, citing rising US supply and weaker demand from China.
- Morgan Stanley said crude shipments and crude exports through the Strait of Hormuz have returned to normal levels, helping maintain market stability.
Forecast Trend Report by Period
Morgan Stanley lowered its oil price forecasts, citing a faster-than-expected recovery in crude shipments through the Strait of Hormuz, rising US supply and slowing demand in China.
Bloomberg reported on June 29 that Morgan Stanley cut its average Brent crude forecast for the third quarter of this year by $15 a barrel to $75. The bank also expects Brent to fall to $70 a barrel in the third quarter of next year.
Crude exports through the Strait of Hormuz are recovering faster than expected, Morgan Stanley said. It added that two forces stabilizing the market remain in place: high US crude exports and low Chinese imports.
A total of 35 oil and gas tankers passed through the Strait of Hormuz on June 26, according to the bank. That is back within the normal pre-conflict range of 30 to 40 vessels a day.
Morgan Stanley said flows through the strait would only need to recover to 11 million to 12 million barrels a day, or about 65% of pre-conflict levels, to balance the oil market in 2027.
Brent futures briefly rose above $126 a barrel in April, but later surrendered most of those gains as the US and Iran continued ceasefire and war-ending talks. The most-active September Brent contract settled at $73.91 a barrel on June 29.
Suehyeon Lee
shlee@bloomingbit.ioI'm reporter Suehyeon Lee, your Web3 Moderator.