Morgan Stanley is not flinching. The bank reiterated its Brent crude forecast at $110 per barrel for the second quarter of 2026, holding steady from its previous outlook even as other analysts debate whether the war premium has peaked [1].

The core thesis is supply lag. While demand disruption from tariffs and economic slowdown might ordinarily push prices lower, the physical supply picture refuses to cooperate. Iranian exports remain constrained under blockade conditions. Hormuz transit insurance costs have elevated effective shipping prices across the Gulf. And OPEC+ has shown no urgency to flood the market with spare capacity [1].

Morgan Stanley projects a glide path to $100 per barrel by Q3, implying the bank expects some normalization — but not quickly [2]. The spread between Q2 and Q3 forecasts effectively prices in two to three months of continued disruption before any meaningful supply relief materializes.

The forecast matters beyond trading desks. A sustained $110 Brent environment feeds directly into global inflation metrics, airline fuel surcharges, petrochemical input costs, and the fiscal math of oil-importing nations. India, Japan, and European economies all face worsening terms of trade at these levels.

For producers, the picture is different. US shale operators are generating record free cash flow. Saudi Aramco's revenue outlook has improved. The asymmetry — consumer pain funding producer windfalls — is one of the defining features of this conflict's economic architecture.

Morgan Stanley's refusal to revise downward is itself a signal. The bank sees no catalyst for relief in the near term.

-- DARA OSEI, London