Morgan Stanley anticipates Brent crude will decrease to approximately $60 per barrel by early 2026. This prediction is based on calming geopolitical tensions, especially between Israel and Iran, alongside a well-supplied market.<\/p>\n
The bank expects a robust non-OPEC supply growth of about 1 million barrels per day in both 2025 and 2026. This supply increase is anticipated to meet the rising global demand effectively.<\/p>\n
Additionally, Morgan Stanley maintains its outlook of a 1.3 million barrels per day oversupply in 2026. The expectation is that these factors will contribute to the decrease in Brent crude prices.<\/p>\n
What the analysis highlights is a forward-looking view that places downward pressure on Brent crude over the next two years. Morgan Stanley sees lower geopolitical risk, particularly from the Middle East, as easing market volatility. Reduced concerns over conflict mean traders can focus more on supply-demand balances rather than risk premiums. Supply is expected to remain comfortably ahead of demand, driven largely by producers outside OPEC. According to the bank’s outlook, this should cause Brent to trend lower, landing near $60 a barrel by early 2026.<\/p>\n
Given the additional production from countries not bound by OPEC quotas, the market appears well-resourced. The forecast estimates an increase of around one million barrels per day in each of the years ahead. That directly addresses the expected uptick in global consumption, which is rising steadily but not fast enough to counter the extra barrels coming online. Even as economies expand and energy needs grow, the pace of production is still likely to leave inventories with a surplus through next year and well into 2026.<\/p>\n
This outlook isn’t static either. The estimated oversupply of 1.3 million barrels per day in 2026 is not a vague number\u2014it\u2019s rooted in widely tracked project developments and firm estimates, suggesting most of the additional input is already outlined. What this means for us is a lower ceiling on prices unless unexpected cuts or interruptions reduce this projected surplus.<\/p>\n
For those of us tracking derivatives tied to oil, the implied structure begins to lean into contango. As contracts further out get priced lower, short-term instability might create premium opportunities in the near-term market. But the broader shape of the curve may start to reflect that prices are anchored downward by the oversupply narrative.<\/p>\n
It\u2019s also worth remembering that sentiment shifts can be sharp, but aimless trading based on headline risk is misaligned with this underlying structural view. Fewer geopolitical shocks reduce the chance of abrupt short squeezes or panicked buying. If tension continues to de-escalate between countries currently in the spotlight, risk premiums could shrink further, placing additional downward pull on price expectations.<\/p>\n
We should remain attentive to the balance between speculative positioning and commercial hedging. If supply looks stable from both North America and key non-OPEC regions, as predicted, call spreads and upside trades may offer less value unless timing is exact. Meanwhile, strategies built around gradual flattening could support consistent risk-adjusted returns, especially with clarity on production numbers coming into focus over the next two quarters.<\/p>\n
Watch for month-on-month inventory builds and freight rate trends from key ports. With more cargoes entering shipping routes, contango structures in futures may deepen, presenting roll-yield dynamics worth exploiting. For now, the path towards lower crude benchmarks seems supported by quantifiable flows rather than sentiment alone.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" Morgan Stanley forecasts Brent crude to fall to $60 by 2026 due to oversupply and easing tensions.<\/p>\n","protected":false},"author":62,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-25574","post","type-post","status-publish","format-standard","hentry","category-live-updates"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/25574","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/users\/62"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/comments?post=25574"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/25574\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media?parent=25574"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/categories?post=25574"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/tags?post=25574"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}