Morgan Stanley raises Q4 Brent forecast to $105 on supply risks
Oil futures rose in Wednesday trading after Saudi Arabia’s Energy Ministry said an administrative building belonging to Saudi Aramco in the eastern city of Dhahran was targeted Tuesday evening, and as U.K. Maritime Trade Operations reported a separate strike on a tanker in the Strait of Hormuz. December Brent crude futures rose 0.2% to $105.92 a barrel, while December West Texas Intermediate futures gained 0.2% to $93.39 a barrel. The gains followed a mixed session Tuesday, when Brent settled lower while front-month U.S. crude edged higher.
The Saudi Energy Ministry said the attack on the Aramco building in Dhahran caused a limited fire Tuesday evening and that no injuries or fatalities resulted. Dhahran is the headquarters of Saudi Aramco.
U.K. Maritime Trade Operations said a tanker was struck by an unidentified projectile in the Strait of Hormuz on Tuesday. The agency said authorities were investigating the incident.
Crude oil continued to flow through the waterway despite the continuing shipping risks. U.S. Central Command said Tuesday that American forces had assisted Gulf partners in shipping more than 19 million barrels of crude through the Strait of Hormuz on Monday alone. The command also rejected an Iranian military claim that Tehran controlled the waterway.
Morgan Stanley raised its Brent forecast for the fourth quarter to $105 a barrel from $100, citing tight supplies, geopolitical risks and higher freight costs. The bank said shorter shipping distances to European markets favor Brent, while crude from Brazil, West Africa and the United States has become less competitive because of higher shipping costs. Morgan Stanley also raised its first-quarter 2027 Brent forecast to $100 from $95.
In refined-product markets, India’s middle-distillate exports could remain elevated as European diesel supplies remain tight, according to S&P Global Energy. European diesel inventories are expected to fall to their lowest year-end level in more than a decade, said Saransh Katiyar, an analyst at S&P Global Commodities at Sea. India’s middle-distillate exports reached a one-year high of nearly 740,000 barrels a day in September, according to the firm’s data.
The International Energy Agency is scheduled to release its October oil market report Wednesday, providing updated assessments of global supply, demand and inventories amid the continuing disruptions.