Morgan Stanley expects Brent oil to climb to $90/barrel by Q3 2024

raised itsoil price forecasts by $10 per barrel to $90 for the third-quarter of, citing tighter supply and demand balances on OPEC+ commitment and Russia’s oil production curtailments after recent drone attacks on its refineries.

lowered its supply forecast for OPEC and Russia by 0.2-0.3 million barrel per day (bpd) for 2Q/3Q as it sees a modest deficit in second quarter, increasing to a larger deficit in the third quarter.

The bank also hiked its first-quarterprice outlook to $85 per barrel from $82.5, second-quarter forecast to $87.5 from $82.5 and for the fourth quarter it sees prices at $85 versus $80 previously.

READ: OPEC sticks to oil demand view, sees better economic growth

Oil benchmarkhovered just under the $86 a barrel mark on Monday. Prices have been supported as Ukraine has stepped up attacks on Russian oil infrastructure since the start of the year, hitting numerous large oil refineries in an attempt to cripple Russia’s military.

Attacks on Russia’s oil infra

“These attacks probably mean that some oil production may still need to be reduced. As a result of this, combined with the OPEC+ commitment, we have reduced our oil production forecast for Russia for 2Q and 3Q by ~0.2 million bpd as well.”

is also of the view that instead of a geopolitical risk premium, there is actually still a small discount in theprice for the risk that OPEC cohesion deteriorates.

“Every month that OPEC discipline remains in-place,flat price will likely continue to catch up with where inventories and time spreads already are.”

READ: OPEC+ producers extend oil output cuts to second quarter

OPEC+ members led by Saudi Arabia and Russia earlier this month agreed to extend voluntary oil output cuts of 2.2 million bpd into the second quarter.

stilloil demand to grow at 1.5 million bpd this year, slightly above historical trend growth, driven by jet fuel and petchem, and regionally by China and India.