Not long ago, analysts were floating the possibility of oil hitting $150 per barrel if the Strait of Hormuz stayed closed. Now Morgan Stanley is cutting its price targets by double digits, and the story has changed considerably.

The bank lowered its Dated Brent forecast for Q3 2026 from $100 per barrel to $90, and slashed the Q4 2026 outlook from roughly $95 down to $80. That is a $15-per-barrel haircut on the back half of the year, driven by a faster-than-expected reopening of one of the world’s most critical oil shipping corridors.

What changed, and why it matters now

The catalyst is a US-Iran agreement announced around June 15-16, 2026, which is expected to restore crude flows through the Strait of Hormuz. The strait is the narrow chokepoint connecting Persian Gulf producers to global markets.

Morgan Stanley’s analysts now anticipate roughly 50% of disrupted output returning by September 2026, with about 80% back online by December. Full production recovery is not expected until early 2027.

Goldman Sachs has also cut its oil price forecasts, signaling that what was once a tight-market consensus is now shifting toward a surplus scenario for the second half of the year.

The demand side is doing Morgan Stanley’s work for it

The Hormuz reopening is not the only force pushing forecasts lower. Two structural factors are compounding the supply recovery: persistent strength in US oil exports and persistently weak Chinese demand.

US production has remained robust, adding to the global supply picture at a moment when OPEC+ has also been gradually unwinding output cuts. As the world’s largest crude importer, Chinese demand weakness carries disproportionate weight in global oil balances.

What investors in energy need to watch

Oil producers that priced projects assuming $100-plus Brent may need to revisit capital allocation. An $80 Q4 Brent print versus a $95 one is the difference between a comfortable earnings beat and a difficult quarter for integrated majors.

Analysts have noted that even with the Hormuz deal in place, complete normalization of tanker flows will take additional time. Shipping rates that spiked on disruption fears will not unwind overnight, but the directional pressure is now toward normalization.

Any deterioration in US-Iran relations before full production recovery in early 2027 would immediately reprice the supply outlook upward. The $80 Q4 forecast assumes the deal holds.