Morgan Stanley has aggressively cut its oil price forecasts, a sharp reversal from recent peak-supply fears. The bank lowered its Dated Brent forecast for Q3 2026 from $100 to $90 per barrel. The Q4 2026 outlook was slashed from roughly $95 down to $80.
The catalyst is a US-Iran agreement expected to restore crude flows through the Strait of Hormuz. Analysts anticipate roughly 50% of disrupted output returning by September 2026, with about 80% back online by December. Full production recovery is not expected until early 2027.
Two structural factors are compounding the supply recovery: persistent strength in US oil exports and weak Chinese demand. As the world’s largest crude importer, China’s slowing consumption carries disproportionate weight in global balances.
For investors, an $80 Brent print versus a $95 one marks the difference between comfortable earnings and a difficult quarter for major producers. The forecast assumes the US-Iran deal holds; any diplomatic deterioration would immediately reprice the supply outlook upward.