The global oil market is in a “race against time,” Morgan Stanley warned in a report released over the weekend, cautioning that Brent crude could surge to $130–$150 per barrel if the Strait of Hormuz blockade extends beyond June. The bank’s analysts, led by global commodities strategist Martijn Rats, said that the buffers keeping prices in check — pre-crisis inventories, elevated U.S. exports, and expectations of a diplomatic resolution — are eroding faster than anticipated.
Buffers Running Thin
Since the outbreak of the U.S.-Iran conflict in late February, the Strait of Hormuz has been effectively closed to most vessel traffic under dual blockades imposed by Iran and the United States. Despite the loss of nearly one billion barrels of crude supply, Brent prices have remained below the 2022 highs reached during the early stages of the Russia-Ukraine war.
Morgan Stanley attributed the relative resilience to three factors: pre-crisis inventory levels, an additional 3.8 million barrels per day in U.S. exports, and a 5.5 million-barrel-per-day reduction in Chinese imports — together offsetting a staggering daily shortfall of 9.3 million barrels. Under its base case, the bank expects the strait to reopen in June and forecasts Brent averaging around $110 per barrel this quarter before easing to $100 in the third quarter.
“If the blockade extends into late June or even July, the absolute price of Brent crude will have to truly surge to absorb the upward pressure avoided thus far,” the analysts wrote.
Inventories Approaching Eight-Year Lows
Goldman Sachs separately flagged that global oil inventories have fallen to roughly 101 days of demand — the lowest level in nearly eight years — and could slip to 98 days by the end of May if the strait remains inaccessible, according to a note carried by Reuters. The rapid depletion exposes the market to further shocks at a time when OPEC+ production increases planned earlier this year appear unlikely given the ongoing conflict.
The standoff in the strait showed no signs of easing last week. On May 6, the U.S. military disabled two Iranian oil tankers attempting to reach an Iranian port, with an F/A-18 Super Hornet firing on one vessel’s rudder. Iran has warned that any foreign military forces entering the strait will be targeted.
What Comes Next
Brent crude settled near $101 per barrel on Friday, posting a weekly loss of about 6% even as renewed clashes tempered hopes for a quick peace deal. The UAE’s formal departure from OPEC on May 1 has added further uncertainty over future production coordination. Citigroup maintains a three-month target of $120 per barrel for Brent, while Barclays holds its 2026 forecast at $100, citing more upside risk.
Morgan Stanley’s analysts cautioned that the longer the strait remains closed, the more the U.S. export cushion will come under pressure — and the closer the market moves toward a scenario few want to contemplate.
