Morgan Stanley maintains oil price forecasts and predicts slow recovery in supply

the Morgan Stanley logo is displayed on its Times Square building in New York

Morgan Stanley left its Brent crude oil price forecasts unchanged on Monday, at US$110 a barrel for ​the second quarter of 2026 and $100 a ‌barrel in the third quarter, falling to $80 a barrel in 2027.

The bank said it expected oil supply chains to take ​months to normalize even if a reopening of the ​Strait of Hormuz can be achieved.

Under its ⁠base-case scenario, exports through the Strait stay at low ​levels in April, recover about 70 per cent of lost volumes ​between May and July, and return to steady-state levels by October.

• Stay on top of your portfolio with real-time data, historical charts and the latest news on oil

Oil prices climbed back above $100 per barrel on Monday, as ​the U.S. Navy prepared to block ships to ​and from Iran via the Strait of Hormuz, potentially restricting Iranian ‌oil ⁠exports, after Washington and Tehran failed to reach a deal to end the war.

Brent crude futures were at $102.23 a barrel by 0810 GMT and U.S. West Texas ​Intermediate traded at $103.88.

Meanwhile, ​Middle Eastern ⁠producers including Kuwait and Iraq have lifted Asia-bound official prices sharply for May.

Saudi Arabia ​set the price of its Arab Light ​crude ⁠to Asia at a record premium of $19.50 a barrel to the Oman/Dubai average.

• Latest updates on international news here

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

Reporting ​by Pablo Sinha in Bengaluru; editing by Barbara Lewis