Morgan Stanley has sharply raised its Brent crude forecast, expecting prices to average about $90 a barrel in the third quarter of 2026, reach $100 in the fourth quarter, ease to $95 in the first quarter of 2027 and then return to $90. The new outlook is materially above the bank’s previous baseline of roughly $75 across those quarters, reflecting a slower-than-expected recovery in Middle East supply. Floating storage has fallen by about 168 million barrels since mid-July, regional exports have retreated toward March and April levels, and Morgan Stanley expects the supply repair process to extend well into 2027, leaving the market in deficit through the fourth quarter of 2026 and the first quarter of 2027. Brent has risen about 30% from its early-July trough and 13% in the past two weeks to between $91 and $93 a barrel. Michael Wilson, Morgan Stanley’s chief US equity strategist and CIO, said oil is the biggest near-term threat to U.S. equities because the damage from a crude surge is greater than the benefit from a comparable decline. The bank’s analysis found that oil-versus-equity beta was roughly twice as impactful when Brent rose as when it fell over the past two months. Wilson’s historical work indicates that stocks face serious trouble when oil rises 75% to 100% year over year, a threshold crossed in five of 23 geopolitical shock events. A $100 Brent price in the fourth quarter would move closer to that danger zone. Morgan Stanley recommends energy stocks as a hedge and continues to favor high-quality, services-oriented, fee-based and asset-light companies, especially in financial services and insurance. It maintains a constructive view on U.S. equities, including its existing 2026 year-end S&P 500 target of 7,800 to 8,000, provided oil stabilizes or rises only moderately.