Morgan Stanley has slashed its oil-price forecasts for the coming quarters, citing an anticipated flood of regional supply as US-Iran negotiations approach what officials are calling their “final stages.” The catalyst: a framework deal expected to reopen the Strait of Hormuz, the narrow waterway that handles roughly 20% of the world’s daily oil traffic.
The bank now projects Brent crude averaging $110 per barrel for Q2 2026, with prices settling into the $90 to $100 range for the back half of the year. Longer-term pressures suggest stabilization closer to $80 to $90 per barrel, a meaningful downshift from previous expectations that had baked in sustained conflict-related supply disruptions.
What’s driving the revision
By mid-to-late May 2026, US-Iran talks had progressed far enough that President Trump declared the Strait of Hormuz would be “completely open” imminently. Oil prices posted their largest one-month drop around May 20, 2026, as tankers resumed their journeys through the strait before a formal agreement was even signed.
The crypto angle Iran built into the deal
