Morgan Stanley (NYSE:MS) lowered its oil price forecasts for this year and next after noting that oil tankers are moving through the Strait of Hormuz faster than expected.
A team of Morgan Stanley strategists led by Martijn Rats lowered its fourth-quarter Brent crude forecast to $75 per barrel from $80 and cut its end-2027 target to $70 from $80, MarketWatch reported on Tuesday, citing the bank’s latest client note.
The analysts cited improving oil flows, noting that 35 outbound oil and gas tankers transited the contested waterway last Thursday, returning traffic to pre-conflict levels.
These figures include five very large crude carriers (VLCCs), capable of transporting a combined 10 million barrels of crude oil for export. On the same day, 15 tankers, including five VLCCs, transited the route inbound.
The analysts also mentioned the “twin solvers” – high U.S. oil exports and depressed net imports into China – which are still protecting the rest of the oil market from nearly 10 mb/d of tightness.
As Middle East exports rebound, the supply shortage is easing, creating a surplus in the Brent and Dubai crude markets and leaving an unusually high number of cargoes unsold. As the Strait reopens, Morgan Stanley estimates a 4.8 million bpd surplus for next year, up from a pre-war surplus of 2 to 3 million barrels per day.
Shippers Doubt Quick Hormuz Return
Morgan Stanley’s report of a faster-than-expected Hormuz reopening is a sharp contrast to the conservative estimates of the leading shipping companies. On Sunday, NYK Line CEO Takaya Soga stated that traffic at the critical waterway will be less than half of prewar levels for several months, even if the U.S.-Iran peace deal holds. He said that the operations were “still nowhere near returning to conditions before the closure of the Strait of Hormuz.”
Earlier, Japan’s Mitsui O.S.K. Lines said shipping companies are expected to continue avoiding the Strait of Hormuz despite the U.S.-Iran agreement until the route is proven safe.
While the oil price remains above $71 per barrel, President Donald Trump has been pressuring gasoline retailers to lower pump prices to $2.50 a gallon, warning of “big problems” if they do not.
At the time of writing, Brent crude oil price was trading 0.64% higher at $73.79 per barrel, while the WTI crude futures were trading 0.76% up at $71.28 per barrel.
Meanwhile, the average gas price in the U.S. stands at $3.84 per gallon, as per AAA.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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