Morgan Stanley has slashed its oil price forecasts for the next 18 month as it expects the reopening of the Strait of Hormuz to accelerate a new supply glut.<\/p>\n
The return of oil supply from the Middle East, combined with high U.S. oil exports and still weak Chinese crude purchases, will bring the market full-circle to a new glut in the coming months, according to the bank\u2019s analysts, who slashed their oil price projections for the second time in two weeks.<\/p>\n
Morgan Stanley now expects Dated Brent to average $75 per barrel in the third quarter this year, a downward revision of $15 a barrel from the previous forecast, in a note cited by Bloomberg<\/a>.<\/p>\n The average Dated Brent price, the benchmark for physical transactions, is set to average $75 per barrel in the fourth quarter, too, according to the analysts. This is $5 a barrel lower compared to the previous projection from the middle of June, when Morgan Stanley and other major investment banks slashed their price forecasts<\/a> after the U.S. and Iran signed a memorandum of understanding to negotiate a deal within 60 days.<\/p>\n Set OilPrice.com as a preferred source in Google here<\/a>.<\/p>\n Morgan Stanley now expects a Dated Brent price of $70 per barrel at the end of 2027.<\/p>\n \u201cAs attention turns to 2027, the market has come full circle \u2013 back to surplus,\u201d the bank\u2019s analysts wrote in the note.<\/p>\n Separately, Goldman Sachs has cut its price forecast for the fourth quarter to $80 per barrel from $90 per barrel, and the 2027 average forecast for Brent crude to $75 per barrel from $80 in earlier forecasts. According to the bank\u2019s commodity analysts, tanker traffic via the Strait of Hormuz would recover fully by the end of July.<\/p>\n Goldman has also warned that tanker traffic via the Strait of Hormuz may never fully recover<\/a> to pre-war levels thanks to alternative routes that oil producers in the Middle East have tapped amid the crisis.<\/p>\n By Tsvetana Paraskova for Oilprice.com<\/a><\/p>\n