According to APP, Morgan Stanley's latest report has raised its Brent crude oil price forecast for the second quarter of 2026 to $110 per barrel. This significant increase primarily reflects the continued geopolitical conflict with Iran , which has disrupted shipping in the Strait of Hormuz, leading to a rapid rise in risk premiums in the global oil market. Latest market data shows that Brent crude spot prices have risen to approximately $104.78 per barrel, a substantial increase of over 45% since the beginning of the year, with significantly enhanced short-term volatility.

Analysts point out that if the conflict fails to subside quickly, the risk of supply disruptions will evolve from a short-term premium to a shift in the overall price level throughout the year. Current oil prices have broken through the $100 mark, and the surge in energy import costs is directly pushing up global inflation expectations while simultaneously suppressing demand-side economic growth. Unlike simple cyclical fluctuations, this round of upward movement is a typical supply-shock driven phenomenon: blocked shipping routes have led to a sharp decline in exports, which even OPEC+ production increases cannot fully offset. Accelerated inventory reduction will support prices remaining high.

The underlying logic behind this forecast adjustment lies in the amplified geopolitical uncertainty. The Strait of Hormuz handles approximately 20% of global oil shipments; a closure of it for more than two months would severely test the energy security of Asia and Europe. Morgan Stanley believes that current market pricing fully incorporates geopolitical risks, but if the conflict prolongs, the Q2 real price center may further shift upwards to the $110 range. This will have a cascading effect on Gulf oil-producing countries, import-dependent economies, and downstream manufacturing: oil-producing countries will see short-term revenue increases but face export losses, while non-oil-producing countries will bear the dual pressures of inflation and growth.

The following is a comparison of Morgan Stanley's latest Brent crude oil price forecast scenarios for 2026 (based on institutional reports and market consensus):

Historically, similar supply shocks have driven oil prices up rapidly and sustained for months. This price increase highlights the market's shift from a "fundamentally loose" to a "geopolitically driven" pricing model. In the short term, high oil prices will benefit the energy sector but drag down global manufacturing costs; in the medium term, if signals of reopening shipping routes emerge, prices may correct, but the $110 level has become a new benchmark.

Overall, Morgan Stanley 's revised forecasts reinforce the expectation of high oil prices in 2026. Investors should closely monitor developments in the conflict, OPEC+ activities, inventory data, energy-related assets, and manage the risk of inflation transmission.
Editor's Summary: Geopolitical conflicts have become a core variable in oil price pricing. Morgan Stanley's upward revision of its Q2 forecast to $110 reflects the market's high level of vigilance regarding supply security. Current spot prices around $104 have fully reflected the risk premium; future price movements will depend on the duration of shipping route recovery and the resilience of global demand. Oil-producing and importing countries need to simultaneously assess their fiscal and inflation buffer capabilities. The restructuring of global supply chain costs may become one of the main macroeconomic themes in 2026.

Frequently Asked Questions
1. Why did Morgan Stanley suddenly raise its Brent crude oil price forecast for Q2 2026 to $110?
The main reason for the supply disruption is the disruption of shipping through the Strait of Hormuz caused by the geopolitical conflict with Iran . This has escalated the risk of supply disruption from a short-term premium to a year-round pressure. Analysts believe that while current market pricing has already factored in some of the risk, if the conflict continues into Q2, the actual supply gap will push prices above the previous $62-72 range. The latest forecast of $110 is a quantitative response to this supply shock.

2. The current spot price of Brent crude oil has reached $104. What is the relationship between this and the new forecast?
Latest data shows that Brent crude has risen to approximately $104.78 per barrel, an increase of over 45% since the beginning of the year. Morgan Stanley has raised its Q2 forecast to $110, indicating that institutions expect the short-term highs to continue rather than fall rapidly, and risk premiums will remain high. Investors can view the current price as the starting point of a new consolidation rather than the peak.

3. What cascading effects will the increase in oil prices to $110 have on the global economy?
The surge in energy import costs will directly push up inflation expectations, and major Asian and European manufacturing sectors will face higher logistics and production costs. While oil-producing countries may see short-term revenue increases, limited export volumes will create a double whammy. Overall, high oil prices will amplify the risk of stagflation, narrow central bank policy space, and significantly increase cost pressures on downstream industries such as automobiles, aviation, and chemicals.

4. If geopolitical conflicts ease, will oil prices quickly fall back to previously predicted levels?
A short-term pullback may occur due to the fading risk premium, but Morgan Stanley believes that $110 has become the new benchmark for Q2. The pace of inventory reduction and OPEC+ production increases will determine the extent of the decline. If the resumption of trading is delayed, the price level will remain high, and investors should be wary of the "pullback after a surge but not back to the starting point" pattern.