Morgan Stanley Forecasts Brent Crude at 100 Dollars

Morgan Stanley forecasts that Brent crude oil will average 100 dollars per barrel during the fourth quarter of 2026. The brokerage predicts a market deficit will persist through the first quarter of 2027, driven by a convergence of geopolitical disruptions, constrained shipping, and declining inventories.

Supply risks include the shutdown of the East-West pipeline in Saudi Arabia and constrained exports through the Bab el-Mandeb and the Strait of Hormuz. Shipping bottlenecks at the Rhine and the Panama Canal further contribute to the volatility. While high exports from the United States and subdued imports from China previously stabilized the market, the firm warns that weakening strategic reserves and increased Chinese buying for November have increased sensitivity to supply shocks.

The brokerage expects prices to eventually ease to 90 dollars in the second quarter of 2027 and 80 dollars in the third quarter of 2027. However, this downward trend remains dependent on the recovery of supplies from the Middle East. The firm noted that risks to the forecast are already "skewing to the upside" following a fresh round of disruptions.