Offshore inventories of 168 million barrels plummeted, and the supply gap reached 2027! Damo raised Brent crude forecast to $100

The Zhitong Finance App learned that the Middle East supply recovery period was delayed by Wall Street financial giant Morgan Stanley to 2027, and offshore oil inventories are expected to drop by 168 million barrels. In addition, the release of US strategic oil reserves will end after September, which means that the crude oil market is shifting from a geographical risk premium to a verifiable physical supply gap; although the US-Canada tariff conflict may weaken North American economic growth and oil demand, the short term is still insufficient to offset the decline in inventories and a sharp contraction in exports to the Middle East, especially refined oil products.

As Morgan Stanley anticipates that the probability of Brent crude oil returning to the $100 mark is rising at an accelerated pace, energy producers and refiners may continue to benefit, while the transmission of high oil prices to inflation and long-term US bond yields will suppress highly valued growth stocks; for long crude oil and long positions in energy stocks, the main reverse risk is a Middle East cease-fire, rapid export recovery, or trade war causing stronger demand damage.

Strategic reserves have buffered and declined, the resumption of production in the Middle East has been delayed, and the countdown for oil production has returned to three digits?

As the supply of crude oil and refined oil products falls and inventories are drastically reduced, the oil supply market is tightening significantly, prompting Morgan Stanley to delay expectations for the recovery of Middle Eastern oil supply and raise the Brent crude oil price forecast. It is expected that Brent crude oil will soon rise to $100.

When the Morgan Stanley research report was released, the price of Brent crude oil was about 92 US dollars per barrel, and it has recovered from a recent low. Morgan Stanley pointed out that falling supply and disruptions in Middle Eastern oil flows may continue for a longer period of time, which are key factors driving up oil prices.

At press time, the North American crude oil pricing benchmark, WTI crude oil futures fell 1.8% to $85.48 per barrel; the international crude oil trading price benchmark, Brent crude oil futures, fell 1.39% to $93.04 per barrel.

Crude oil inventories also continued to decline. From July 13 until the report was released, the Morgan Stanley analyst team said that as foreign carriers in both the Strait of Hormuz and the Strait of Mander faced the threat of military attack, global offshore oil stocks were drastically reduced by 168 million barrels — that is, the total amount of in-transit oil and floating silos carried by global tankers dropped sharply, which is equivalent to a decrease of about 4.7 million barrels per day; onshore inventories have also declined.

“Offshore oil inventory” (Oil-on-water) refers to crude oil and refined oil products that have been loaded into oil tankers but have not yet been unloaded into onshore oil depots or refineries. It usually consists of two parts: an oil in transit (oil in transit) that is sailing between a producer country and a consumer country; the other is floating storage (floating storage), which is anchored for a long time after the sea is full of oil and waiting for a buyer or the right price. The International Energy Agency (IEA) also defines it as oil used for temporary storage during shipping or in an anchored tanker.

Export volumes from the Middle East have fallen sharply to around the level of March to April; at the same time, the buffer provided by US strategic oil reserves is weakening significantly, and related releases are expected to end after September.

Morgan Stanley currently anticipates that the Middle East supply recovery process will continue until later in 2027, leaving the oil market in a state of severe supply shortages in the fourth quarter of 2026 and the first quarter of 2027. The agency raised the Brent crude oil price forecast for the fourth quarter to $100 per barrel.

In a recent research report, Morgan Stanley raised Brent's price forecast for the third quarter of 2026 to $90 per barrel, further raised it to $100 in the fourth quarter, and raised the forecast for the first quarter and the second quarter of 2027 to $95 and $90, respectively.

The agency's analyst team also pointed out that restrictions in the refining process are currently drastically limiting demand for crude oil; however, record refining margins and the Brent crude oil price of about $92 per barrel still leave plenty of room for crude oil to rise further.

Is the geopolitical situation in the Middle East getting out of control?

As of August 24, 2026, the US-Iran conflict has not entered a stable cease-fire, but rather a complex confrontation of “maritime blockade+shipping control+extreme economic pressure”: the previous two rounds of temporary cease-fire have all been broken, and Trump has made it clear that there are no negotiation arrangements with Iraq; although Iranian President Pezzahizyan has released a signal to “end the war with strength and dignity,” Tehran still listed the lifting of port blockades, sanctions, and cessation of military threats as prerequisites for reopening the Strait of Hormuz.

In other words, diplomatic statements between the two sides have softened, but the two sides have yet to form an enforceable cease-fire framework. The US is still preparing to maintain a long-term maritime blockade, while Iran continues to use strait navigation and energy supply as core bargaining chips.

The latest “ploy” between the two sides has turned to stifle cash flow and energy transportation: US Treasury Secretary Bezent is preparing to introduce so-called “harshest sanctions in history” and threaten a third country that continues to provide Iran with a trade and financial lifeline with second-level sanctions, focusing on putting pressure on Iran's oil buyers and settlement networks; Iran has blacklisted 45 oil tankers, threatening to fine, seize, and even seize cargo in violation of its navigation rules in the Strait of Hormuz. For global financial markets, this is a typical asymmetric supply risk structure: diplomatic signals can temporarily lower oil prices, but the escalation of sanctions, ship seizure, insurance costs, and friction between China and the US over Iran's oil trade have made it still easy to rise and fall; the real tail risk is a misjudgment that re-escalates the economic war into a large-scale direct military conflict.

The Strait of Hormuz, which is critical to global energy transportation, is still close to a selective and factual semi-blockade by Iran's military — only 4 commodity ships passed through on Sunday, and overall activity was about 90% lower than before the war. Iran also blacklisted 45 tankers and threatened to seize, fine, or seize the goods; the Strait of Mande faced the risk of a maritime blockade and missile and drone attacks announced by the Houthis supported by the Iranian government, but 24 ships still passed through on Sunday. The two major straits, which are critical to the global energy system, are not yet fully closed in the sense of law, but this is enough to drive up supply premiums, war insurance premiums, and detour costs for crude oil and refined oil products.