Brent falls 30% on the quarter as Morgan Stanley cuts its forecast to $75 a barrel

Crude closed the quarter down about 30%, the steepest three-month drop since early 2020, when Brent fell 65.5% as lockdowns took hold. For jobbers that means rack prices are coming down faster than street prices, which widens street margin for anyone selling out of a tank they filled cheap. The other side is inventory value. Product bought last week is worth less today, so a marketer carrying a full terminal position is eating the markdown.

Brent was also down about 20% on the month as traffic through the Strait of Hormuz tentatively reopened following the US-Iran deal.

Morgan Stanley at $75

Morgan Stanley cut its Brent forecast to $75 a barrel for the third quarter, its second cut in two weeks. The bank expects the Hormuz reopening to bring back Middle East supply. Add high US crude exports and still-weak Chinese buying, and it sees the market heading back into a glut. That points to softer rack numbers for wholesale supply into the back half of the year, if the strait stays open.

When the market goes long, unbranded usually loosens before branded. The spread between branded and unbranded rack could widen if the majors hold their formula while spot product gets cheap.

Asia still light

Asia's crude imports show the demand side hasn't caught up. June imports are running near 20.71 million bpd per Kpler data cited by Clyde Russell, against a pre-war average of 26.79 million bpd in the three months before the Iran war started February 28. May was lighter still at 20.39 million. Weak Asian pull is part of why Morgan Stanley sees the glut building.

Ethanol allocation

India's Supreme Court ordered status quo on a Karnataka High Court direction to reconsider ethanol allocation for supply year 2025-26. It is a procedural hold and does not change any volumes. Blenders there are now waiting on the court before allocation gets settled.

LNG money

Thailand's state-owned PTT is in early talks to invest directly in US LNG export projects, including Woodside's Louisiana plant, to lock in long-term supply and avoid costly spot buys. Shell's LNG Outlook 2026 sees global demand up 65% by 2050 from 2025 levels, though it expects 2026 trade to stay roughly flat at last year's 422 million tons if Hormuz normalizes this summer.

What to watch

Whether the strait stays open. If it does, rack prices could keep softening into Q3, so watch the branded-versus-unbranded spread. A second closure would reverse the glut call and firm rack prices back up.