LONDON, May 11 – Morgan Stanley has warned that the global oil market is entering “a race against time” as the prolonged closure of the Strait of Hormuz threatens to strain supply buffers that have so far prevented a more severe price spike.
Analysts led by Martijn Rats said the market has remained more resilient than expected despite losing nearly one billion barrels of supply during the Iran war, largely because traders anticipated the reopening of the key shipping route and because higher US exports and weaker Chinese imports helped cushion the shock.
However, the bank cautioned that those buffers may begin to weaken if the disruption extends deeper into June or July.
“The path matters,” the analysts said, noting that a reopening in June remains the bank’s base-case scenario, while a longer disruption could force oil prices significantly higher.
The Strait of Hormuz, one of the world’s most critical energy chokepoints, has remained effectively closed to most shipping traffic following escalating conflict involving Iran and the United States.
Although crude prices have surged since the outbreak of the conflict in late February, futures have still failed to surpass the peaks reached after Russia’s invasion of Ukraine in 2022.
Morgan Stanley said the market entered the crisis with stronger buffers than in previous supply shocks, supported by a 3.8 million barrel-per-day increase in US crude exports and a 5.5 million barrel-per-day decline in Chinese imports.
According to the bank, those two factors alone helped shield the market from more than 9 million barrels per day of supply tightness.
Still, analysts warned that the sustainability of elevated US export levels remains uncertain, while China may eventually need to reverse its import slowdown.
If the disruption continues beyond current expectations, Morgan Stanley said Brent crude prices could rise sharply under its bullish scenario, potentially reaching between $130 and $150 per barrel.
Under the bank’s base-case forecast, Dated Brent is expected to average around $110 per barrel this quarter, before easing to $100 in the following quarter and $90 toward the end of the year.
Brent futures climbed as much as 4.6% on Monday to nearly $106 per barrel after President Donald Trump rejected Iran’s latest proposal aimed at ending the conflict.
Morgan Stanley also warned that even if Hormuz were reopened immediately, the market would still face additional disruptions due to damaged infrastructure, refinery outages and shipping bottlenecks.
The bank estimated that another billion barrels of supply could still be lost over the remainder of 2026 because of the time required to restart production fields, repair facilities and reposition tanker fleets.
