By: Economy Middle East

Morgan Stanley has revised down its 2027 Brent crude oil price outlook, citing a significantly looser global supply-demand balance and expectations of a sizeable market surplus. In a recent note published by Reuters, the bank said it now expects Brent to average $75 per barrel in the first half of 2027 and $70 per barrel in the second half, reflecting a more bearish medium-term trajectory than earlier estimates. The revision comes as the bank models an implied global oil surplus of 4.8 million barrels per day in 2027, highlighting expectations that supply growth will continue to outpace demand recovery across major consuming regions.

Wide price scenarios

Despite its lower base-case forecast, Morgan Stanley maintained that oil markets remain highly sensitive to geopolitical disruptions and OPEC+ supply discipline. In a bullish scenario, the bank said Brent could surge to $120 per barrel if the Strait of Hormuz were to be re-closed for a prolonged period, significantly disrupting global seaborne crude flows. In contrast, under a bearish scenario, prices could fall to around $60 per barrel if cohesion within OPEC+ weakens further and the full 4.8 million bpd surplus is realised, allowing inventories to build more aggressively than currently expected.

Shift from earlier views

The latest outlook marks a clear shift from Morgan Stanley’s earlier stance earlier in June 2026, when the bank had already begun lowering near-term forecasts following easing geopolitical tensions in the Middle East and improving oil flow expectations through the Strait of Hormuz. At that time, analysts highlighted that supply restoration across the Gulf could be faster than previously assumed, reducing the need for higher risk premiums in pricing. The June adjustments also aligned with broader market expectations that normalization of regional flows would gradually weigh on prices into 2027.

Broader analyst trend

Morgan Stanley’s downgrade comes amid a wider wave of forecast cuts across Wall Street in June 2026, as major banks reassess the outlook for global crude markets. Institutions including Goldman Sachs and JPMorgan have also lowered medium-term Brent forecasts, citing faster-than-expected supply recovery from the Middle East and rising output from non-OPEC producers, particularly the United States and Latin America. At the same time, weakening demand trends in parts of Asia and Europe have reinforced expectations that the market could swing into surplus territory by 2027.

The International Energy Agency has similarly projected that global oil markets could move into a substantial surplus by 2027 as post-disruption supply recovery accelerates, adding further weight to the bearish medium-term narrative. However, analysts continue to stress that geopolitical risks, particularly around the Strait of Hormuz, remain a key volatility driver capable of triggering sharp short-term price spikes even within a structurally softer price environment.