Morgan Stanley Cuts Oil Price Forecast for Second Time in Two Weeks, Lowering Q3 Brent Prediction to $75
Claire Weston
Morgan Stanley slashed its Q3 Brent forecast from $90 to $75 a barrel in its second downgrade in two weeks; Hormuz Strait traffic recovered faster than expected, and with U.S. exports high and Chinese imports weak, both major banks now warn of a supply glut.
What exactly did Morgan Stanley cut?
Analyst Martijn Rats lowered Q3 and Q4 spot Brent average forecasts to $75 a barrel — a $15 cut for Q3 and $5 for Q4.
All four quarters of next year were also revised down; the bank sees Brent at $70 a barrel by end-2027.
This means → Morgan Stanley is not fine-tuning — it is repricing the entire forward curve. The deeper cut at the short end signals that near-term supply pressure is more urgent than the longer-term outlook.
What happened at the Strait of Hormuz?
Last Thursday, 35 oil-and-gas tankers exited the Persian Gulf — the first time traffic returned to the pre-conflict norm of 30–40 ships per day since fighting broke out in February.
Morgan Stanley calculates that balancing the 2027 oil market requires Hormuz flows at only about 65% of pre-conflict levels, roughly 11–12 million barrels per day. In plain terms = actual traffic has already exceeded the "enough" threshold, so the supply-shortage narrative no longer holds.
A commercial vessel was attacked over the weekend, briefly slowing traffic, but tanker companies broadly maintained their willingness to transit, and stranded ships in the Gulf continued to depart.
How far has the price already fallen?
Brent futures topped $126 a barrel in April; as the U.S. and Iran negotiate a permanent end to hostilities, the entire war-driven rally has been erased.
The most active September contract traded at $73.47 a barrel on Tuesday. This means → the market has flipped from pricing a "war premium" to pricing a "post-peace glut" — and the turn was remarkably fast.
Did Goldman Sachs follow suit?
Goldman cut its Q4 2026 Brent forecast from $90 to $80 and its 2027 average from $80 to $75.
Two major banks moving in the same direction signals that the supply-glut thesis is shifting from a minority view to a consensus.
What variable is still unresolved?
Morgan Stanley's two cuts in two weeks tell their own story — Hormuz reopening has outpaced every prior estimate.
The key unknown: whether Iran will actually impose transit fees after the 60-day free window expires. In plain terms = if Iran starts charging, higher transit costs could re-tighten supply; if it doesn't, the current bearish logic stays intact.
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