Morgan Stanley Raises Brent Oil Forecast for Late 2025 After OPEC+ Move

Morgan Stanley expects Brent Crude prices to average $70 per barrel in the second half of 2025, up from a $66-$68 a barrel range expected previously, after OPEC+ delayed the beginning of its production increase and slowed the pace of the output hikes into 2026.

The OPEC+ alliance decided on Thursday to delay the start of the easing of the 2.2 million barrels per day (bpd) cuts to April 2025, from January 2025. The group also extended the period in which it would unwind all these cuts until September 2026.

The delay and the slower ramp-up in OPEC+’s oil production increases mean that the market would see a smaller surplus than expected, Morgan Stanley analysts wrote in a note, as carried by Reuters.

Excluding the three OPEC members exempted from the cuts (Iran, Libya, and Venezuela), the other nine OPEC producers are now expected to pump 400,000 bpd less in 2025, the bank said. It also lowered its projection of the combined output of the nine OPEC producers by 700,000 bpd by the fourth quarter of 2025.

“In aggregate, this reduces our estimated surplus in 2025 from 1.3 to 0.8 million bpd in our total liquids balance, and from 0.7 to 0.3 million bpd in our crude-only balance,” Morgan Stanley said.

Early on Friday, oil prices were on track to book a weekly loss, as prices have been little moved since the OPEC+ decision on Thursday.

The three-month delay to the start of the easing of the production cuts was expected by the market. The slower pace of planned increases in output and kicking the can down the road may reduce the previously expected market surplus, but it is also an indication that OPEC+ is aware that demand isn’t strong enough to absorb the reversal of all the cuts throughout 2025.