Home Industry Energy Morgan Stanley raises oil forecasts by $10 citing market deficit The bank raised its third quarter estimate to $130 a barrel by Bloomberg April 22, 2022 Morgan Stanley increased its third- and fourth-quarter price forecasts for global benchmark Brent crude by $10 a barrel due to a greater-than-expected supply deficit driven by Russia and Iran. The bank raised its third quarter estimate to $130 a barrel and predicted a supply deficit of about 1 million barrels a day persisting throughout the year, according to a note dated April 21. While oil markets have short-term demand headwinds, they are outweighed by supply issues, it added. Morgan Stanley increased its forecast for daily Russian crude and condensate production losses to 2 million barrels, up from 1 million barrels, because of a widespread boycott of its products following Moscow’s invasion of Ukraine. The war is nearing its third month despite diplomatic efforts for a cease-fire. Russian production has already fallen by about 900,000 barrels a day in the first half of April, earlier than expected, Morgan Stanley analysts including Martijn Rats and Amy Sergeant said. The bank added that there’s a “high risk” the European Union will enact an import embargo on Russian crude. Morgan Stanley scaled back its assumption for returning Iranian supply, citing the lengthy negotiations without a nuclear deal being agreed. The bank had expected flows to climb by about 1 million barrels a day between mid- and end-2022, but has lowered that forecast to 500,000 barrels a day. The likelihood of an agreement is now 50/50, the bank said. Morgan Stanley cut its oil demand growth forecast to 2.7 million barrels a day this year from 3.4 million barrels a day. In the short term, the market is contending with negative GDP revisions, the effects of China’s Covid Zero policy and a large release from the US Strategic Petroleum Reserve. Tags barrel Brent crude China Iran Morgan Stanley Oil Forecasts 0 Comments You might also like OPEC+ agrees to delay October oil output hike for two months Oil climbs over 2% after US Fed’s Powell indicates rate cuts Five bodies recovered from Mike Lynch’s sunken superyacht in Sicily Morgan Stanley boss Jonathan Bloomer, tech tycoon Mike Lynch missing in Sicily yacht sinking