Key Highlights
- Investment bank reduces Q3 2026 Brent crude projection by $15 to $75 per barrel
- Persian Gulf shipping through Hormuz Strait rebounds to 30-40 vessels daily
- Analysts forecast 4.8 million barrels per day global oversupply by 2027
- Brent crude erased April rally, dropping from $126+ peak to sub-$74 levels
- Crude heading toward third consecutive monthly drop and worst quarterly showing since Q1 2020
Investment banking giant Morgan Stanley has revised its oil price projections downward following an unexpectedly swift recovery in maritime traffic through the Strait of Hormuz. The financial institution reduced its Q3 2026 Dated Brent projection by $15 per barrel, establishing a new target of $75.
The revision follows a four-month period of disrupted petroleum shipments through this critical maritime chokepoint. The strait serves as an essential transit corridor for Middle Eastern crude exports.
Maritime Activity Returns to Normal Range
Analysts at Morgan Stanley documented 35 oil and natural gas tankers departing the Persian Gulf via the strait on Thursday. This figure aligns with the pre-conflict baseline of 30 to 40 vessels daily observed prior to February.
This represented the first instance of traffic volumes returning to historical norms since hostilities commenced. Shipping operators and maritime personnel have demonstrated renewed confidence in transiting the waterway, according to the bank’s assessment.
A temporary decline in vessel movements occurred over the weekend following strikes on two ships during renewed hostilities. Nevertheless, the broader trajectory indicates continued normalization.
For 2027 market equilibrium, Hormuz throughput needs only achieve approximately 65% of pre-conflict capacity. This translates to roughly 11 to 12 million barrels daily, based on Morgan Stanley’s calculations.
Oversupply Outlook Replaces Deficit Scenario
The investment bank currently anticipates a worldwide petroleum oversupply of 4.8 million barrels per day in 2027. Prior to the conflict, Morgan Stanley had forecast a more modest surplus ranging from 2 million to 3 million barrels daily for that year.
The strait’s temporary closure had briefly transformed that projected surplus into a significant shortage. With exports resuming, the market dynamics are reverting toward excess supply conditions.
Robust American production coupled with subdued Chinese consumption are compounding oversupply risks. Morgan Stanley identified these dual factors as persistent headwinds for pricing.
The bank additionally lowered its Q4 2026 outlook to $75 per barrel from a previous $80 estimate. For 2027’s first six months, it projects Brent at $75 per barrel, declining to $70 in the latter half.
This represents Morgan Stanley’s second forecast adjustment since Washington and Tehran announced their agreement to cease hostilities and restore strait access earlier this month.
Brent futures had surged past $126 per barrel in April at the conflict’s peak. Those increases have been completely reversed.
The September Brent contract settled at $73.91 per barrel on Monday. Prices continued retreating Tuesday, with August Brent futures declining 0.9% to $72.47 per barrel.
US West Texas Intermediate crude for August delivery dropped 0.5% to $70.24 per barrel. Crude is tracking toward its third straight monthly decline.
This would constitute the weakest quarterly performance for petroleum since early 2020. Iranian and American diplomatic teams were anticipated to convene in Doha this week, though Tehran indicated Monday that no session had been arranged.
Weekend missile exchanges between both parties challenged the provisional ceasefire that concluded the four-month conflict.
