Oil prices may climb as high as $85 per barrel in the coming months, driven by heightened tensions between Israel and Iran, according to a new report by Morgan Stanley.
In a new report, the investment bank said it has raised its Brent crude forecast by $10 per barrel to reflect the elevated risk outlook.
Prices are now expected to average $85 in the third and fourth quarters of 2025, up from earlier projections of $75. Forecasts for the first half of 2026 were also revised upward to $82.5 per barrel.
Read also: Stronger naira seen as oil prices up on Middle-East tensions
According to Morgan Stanley, the recent surge in geopolitical risk has opened up multiple possible price paths for oil, with even limited disruptions from the Gulf region capable of driving prices sharply higher.
The bank’s base case assumes that military activity in the Middle East will not affect oil flows.
“If exports from the region remain unaffected, Brent prices can decline back to $60 per barrel,” the report stated.
However, Morgan Stanley sees a more likely scenario where escalating tensions constrain Iran’s oil exports. This, it said, would wipe out much of the projected global surplus for the year, keeping oil prices within the range of $75 to $80 per barrel.
The report also outlines a worst-case scenario involving disruptions in shipments through the Strait of Hormuz, a vital chokepoint for global oil trade. Any impact on oil supply from the entire Gulf region could trigger a market recovery and price spike.
Read also: Oil prices jump more than 9% after Israel attacks Iran
“With a lack of true historical precedent, this scenario remains an outlier. However, even small probabilities applied to sizeable upsides can skew prices higher,” the report warned.
