Morgan Stanley made substantial cuts to its oil-price forecasts for the coming quarters as the interim deal between the US and Iran to reopen the Strait of Hormuz stands to revive regional output and boost supplies.
Dated Brent — a benchmark for physical transactions — is expected to average $90 a barrel in the third quarter, down from $100 previously, and $80 in the final three months, a reduction of $15, analysts including Martijn Rats said in a note dated June 15. The trajectory for a recovery of output from the Middle East has been brought forward by one to two weeks, they said.
“Much is still to be negotiated and key risks remain, but for now, this is a key step towards a de-escalation of the conflict and higher oil exports via the Strait of Hormuz,” they said, referring to the interim agreement between Washington and Tehran that is slated to be signed in Switzerland on Friday.
Oil prices have slumped to the lowest since early March following the announcement, although the text of the agreement has yet to be released and considerable doubt remains among traders, shippers and producers on how exactly it will be implemented to restart transits through the waterway.
Tanker flows will likely take “several weeks” to be restored as mines are cleared, commercial confidence is rebuilt among shipowners and insurers, and vessels that had been relocated return to the region, the analysts said.
“Also, for production to be restored, export tanks need to be cleared first, which means that the pace at which empty tankers enter the Gulf is arguably even more important than laden tankers leaving,” they said.
With output is expected to ramp up from mid-July, “we assume that 50% of lost production will be back by September, 80% by December, with the rest to follow in early 2027,” they added.
(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)
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