Morgan Stanley has lowered its Brent crude oil price forecast for the fourth quarter of this year by $15 per barrel to $80, after the U.S. and Iran signed a preliminary agreement to end the war in the Gulf.
“From here, it likely takes several weeks for tanker flow to be restored; we see 50% of production back by September, and 80% by December, slightly faster than before,” the bank said in a note late on Monday.
Morgan Stanley joined other banks in lowering their oil price forecasts after U.S. President Donald Trump announced the preliminary agreement, although details have yet to be made public and both the U.S. and Iran said a permanent truce was yet to be negotiated.
Oil prices extended losses on Tuesday, as markets weighed the prospects for a resumption of supply through the key Strait of Hormuz, which typically carried one-fifth of the world’s oil supply before the conflict.
By 0752 GMT, Brent crude futures were down 1.3% to $82.06 a barrel, and U.S. West Texas Intermediate was down 1.5% at $79.55 a barrel, both hitting their lowest levels since March 10. Prices were trading around $70 before the war.
The cumulative supply loss from the Middle East since March 1 has reached about 1.4 billion barrels across both crude oil and refined products, relative to the same period in 2025, Morgan Stanley said.
Analysts at the bank still see a tight summer, with a deficit of 3.4 million barrels per day expected in the third quarter. However, with the MOU announcement to end the Iran war and reopen the Strait of Hormuz, this undersupply is likely to remain limited to the third quarter, and the oil market is expected to return to balance in the fourth quarter, they added.
“However, given that the ‘twin-solvers’ of high U.S. exports and low Chinese imports seem to continue for now, the spread over $80/b can only be so much. With that in mind, we peg our average 3Q Dated Brent forecast at $90/b, down from $100/b before,” they wrote.
(Reporting by Noel John and Swati Verma in Bengaluru; Editing by Tom Hogue and Muralikumar Anantharaman)