Morgan Stanley has raised its Brent crude oil price forecast for the third quarter of this year by $4 per barrel to $94, citing geopolitical risks. “That the degree of geopolitical risk in key oil producing regions has increased recently seems clear and uncontroversial,” said the leading investment bank in a recent note.
Brent crude futures rose to just above $90 a barrel last week after hopes faded that talks between Israel and Hamas would lead to a ceasefire in Gaza amid concerns the lingering conflict could disrupt supply from the key Middle East producing region.
The elevation in crude prices also comes as OPEC, the group comprising the Organization of the Petroleum Exporting Countries (OPEC) and allies led by Russia, last kept its oil supply policy unchanged and pressed some countries to increase compliance with output cuts.
Morgan Stanley said that with OPEC supply restraints, some downside to Russia production, and a seasonal upswing in demand ahead, it expects tightness in the second and third quarters. Ukrainian strikes on Russian refineries may have disrupted more than 15 per cent of Russian capacity, said a NATO official earlier this month.
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