U.S. Entry into Conflict – Morgan Stanley Outlines Three Oil Price Scenarios: From $60 to $140 per Barrel

TradingKey - Escalating tensions between Israel and Iran have sent international oil prices sharply higher, with U.S. airstrikes on Iran intensifying concerns over broader disruptions to crude supply. A recent report from Morgan Stanley outlines three potential conflict scenarios that could determine the trajectory of oil prices, while Goldman Sachs and JPMorgan have also warned of possible oil prices surpassing $100 per barrel.

According to a post by President Donald Trump on June 21, the U.S. has completed strikes on three Iranian nuclear facilities. BBC reported that past U.S. presidents have exercised restraint in military action against Iran’s regime — making Trump’s move historic and unprecedented for a leader who once pledged to be a “president of peace.”

Morgan Stanley’s Three Oil Price Scenarios

In a recent report, Morgan Stanley outlined three possible scenarios based on the evolution of the Israel-Iran conflict and their impact on global oil supply:

1. Limited Impact on Crude Transport
   If regional crude exports remain stable and supply chains are not significantly disrupted, Brent crude could retreat to around $60 per barrel.
2. Iranian Exports Fall Sharply
   A major drop in Iranian oil exports could eliminate the expected global oil surplus in 2025. After rebalancing supply and demand, oil prices would likely stabilize within a range of $75–$80 per barrel.
3. Escalation Across the Gulf
   If the conflict widens and affects broader Gulf oil production or shipping — particularly if the Strait of Hormuz is blocked, through which one-fifth of global crude flows — oil prices could revisit levels seen during the Russia-Ukraine war in 2022, when prices surged toward $140 per barrel.

Oil prices reached around $140 per barrel in 2022 due to the Ukraine conflict, before retreating as OPEC+ cut output and the U.S. released strategic reserves.

At the time of writing, WTI crude oil was trading at $74.88 per barrel, and Brent crude oil was at $76.69 per barrel.

Goldman Sachs Warns of Over $100 Oil

Goldman Sachs offered a similar outlook, noting that if only Iranian crude supply is disrupted, Brent crude could peak slightly above $90 per barrel, with its trajectory depending on whether Iranian supply returns and how much OPEC+ producers increase output compared to others.

However, if the disruption escalates into broader production or shipping interruptions, oil prices could rise above $100 per barrel.

Goldman analysts added that a price surge like the $120–$130 per barrel seen when Russia first invaded Ukraine is not out of reach nor unreasonable under extreme scenarios.