Morgan Stanley lowers crude oil price expectations due to increased supply after US-Iran agreement signed.

Morgan Stanley significantly lowered its future oil price forecasts for the next few quarters, as the temporary agreement reached between the United States and Iran to reopen the Strait of Hormuz is expected to restore regional oil production and increase supply. Analysts, including Martijn Rats, stated in their report that the spot price of Brent crude oil, which serves as a benchmark for physical trading, is forecasted to average $90 per barrel in the third quarter, down from the previous estimate of $100; and $80 per barrel in the last three months, a decrease of $15. They mentioned that the recovery process of oil production in the Middle East has been accelerated by one to two weeks. They said, "There are still many issues that need to be negotiated, and key risks remain, but for now, this is a crucial step towards easing the conflict and exporting more oil through the Strait of Hormuz." They referred to the agreement scheduled to be signed on Friday in Switzerland between Washington and Tehran. After the announcement of the agreement, oil prices have fallen to the lowest point since March, despite the fact that the agreement text has not yet been released and traders, shippers, and producers have significant doubts about how to effectively implement the resumption of waterway transport. The analysts mentioned earlier pointed out that it may take "several weeks" for oil tanker transport to resume, as there is a need to clear mines, rebuild commercial confidence in ship owners and insurance companies, and for vessels that were previously relocated to return to the region. They added that production is expected to gradually increase from mid-July, "we assume that 50% of the lost production will be restored by September, 80% by December, and the remainder will be restored by early 2027."