Morgan Stanley Cuts Oil Price Forecast: Q3 Brent Down to $90, Production Recovery Could Extend to 2027
Alina Collins
Morgan Stanley slashed its Q3 Brent forecast from $100 to $90 and Q4 from $95 to $80, betting a US-Iran interim deal will reopen the Strait of Hormuz — but physical export volumes will lag the political signal by months.
How deep are the cuts?
Analyst Martijn Rats's team, in a June 15 note: Q3 prompt Brent from $100 to $90, Q4 from $95 to $80 — a $15 single-quarter drop.
This means → Morgan Stanley now prices Middle East supply recovery as a base case, not a tail-risk scenario.
The trigger is a US-Iran interim deal set to be signed Friday in Switzerland — but the deal text is not yet public, and the market remains skeptical on execution details.
When does production come back?
Morgan Stanley pulled the recovery timeline forward by one to two weeks, expecting the ramp to begin mid-July.
Specific assumptions: 50% of lost output back by September, 80% by December, the remainder stretching into early 2027.
In plain terms = even under the best case, a full return to pre-conflict output is at least eighteen months away.
The strait reopens — why can't oil flow immediately?
Morgan Stanley flags an overlooked bottleneck: export storage tanks must be emptied first. The speed of empty tankers entering the Gulf matters more than loaded tankers leaving.
Tanker traffic needs "weeks" to normalize — mine-clearing operations, shipowners and insurers rebuilding commercial confidence, and vessels rerouted to other regions gradually returning to the Gulf.
This means → even after a political announcement that the Strait of Hormuz is open, physical export volumes will visibly lag, and oil prices may not drop overnight.
Where is the biggest uncertainty in this call?
The note itself concedes: "Significant details remain to be negotiated and key risks persist."
No public deal text + vague execution terms = the market is pricing a directional signal, not confirmed barrels.
This reflects Morgan Stanley's framing: reprice now for the most likely outcome, but stretch the recovery timeline long enough to cushion execution risk.
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