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 China bans export of rare earths processing tech over national security Oil market comfortably supplied despite OPEC+ cuts: Insight India’s economy follows China to reach rapid take off: Kemp COP28: Who are the big name attendees?