Brent crude futures fell approximately 1% as markets paused to evaluate the broader implications of fresh U.S. military strikes on Iran, reversing an earlier advance that had pushed prices up 1.40% to $79.09 per barrel at the open. The intraday reversal reflects the market's attempt to weigh the immediate supply disruption risk against the broader demand and surplus dynamics that had been shaping the outlook prior to the latest escalation. The move follows a prior session where Brent surged more than 5%, settling at $78.02 per barrel — a gain of $3.86 or 5.20% — as markets monitored the fragile state of the U.S.-Iran truce. That sharp upward move had followed an earlier session where Brent climbed to $74.16 per barrel, gaining $2.17 or 3.01%, after the United States revoked a license that had been allowing Iranian oil sales.

Key Price Levels and Forecasts

The table below highlights the key price reference points and updated forecasts for Brent crude:

Supply Dynamics and Market Surplus

Ahead of the U.S. license revocation, supply-side pressures had been building on multiple fronts. Morgan Stanley noted that 35 outbound oil and gas tankers recently transited the Strait of Hormuz, returning traffic to pre-conflict levels. These 35 outbound tankers include five very large crude carriers (VLCCs), capable of transporting a combined 10 million barrels of crude oil for export. On the same day, 15 tankers, including five VLCCs, transited the route inbound. As Middle East exports rebounded, the supply shortage was easing, creating a surplus in the Brent and Dubai crude markets and leaving an unusually high number of cargoes unsold. Morgan Stanley had estimated a 4.80 million barrels per day (bpd) surplus for next year, up from a pre-war surplus of 2 to 3 million bpd, with the OPEC+ output hike announcement further compounding supply-side pressure. The revocation of the Iranian oil sales license, now followed by a fresh U.S. military strike, introduces new variables that could materially affect these surplus projections.

Morgan Stanley Forecast Revisions

Prior to the latest U.S. policy and military actions, Morgan Stanley had lowered its oil price forecasts. A team of strategists led by Martijn Rats reduced the bank's fourth-quarter Brent crude forecast to $75 per barrel from $80 and cut its end-2027 target to $70 from $80, citing improving oil flows as a key driver of the revised outlook. The bank's bearish revision had been underpinned by the assumption of sustained supply recovery through the Strait of Hormuz and continued OPEC+ production increases. The renewed military escalation now poses a direct challenge to those assumptions.

Shipping Industry Skepticism

Morgan Stanley's report of a faster-than-expected reopening of the Strait of Hormuz contrasted with estimates from leading shipping companies. NYK Line CEO Takaya Soga stated that traffic at the critical waterway will be less than half of prewar levels for several months, even if the U.S.-Iran peace deal holds, describing operations as "still nowhere near returning to conditions before the closure of the Strait of Hormuz." Japan's Mitsui O.S.K. Lines previously indicated that shipping companies are expected to continue avoiding the Strait until the route is proven safe.

Geopolitical Context

The latest U.S. military strike on Iran comes against a backdrop of stalled talks between the two nations to end the nearly four-month war. Iran had delayed negotiations scheduled to begin in Switzerland because of ongoing hostilities involving Israel and Hezbollah. The U.S. and Iran had signed an initial peace agreement aimed at ending the conflict, which includes a permanent end to hostilities and the reopening of the Strait of Hormuz within 30 days. However, Iran insists that an interim peace deal must include an end to Israeli military action in Lebanon. The combination of the revoked Iranian oil sales license and the fresh U.S. strike on Iran significantly deepens uncertainty over the medium-term supply outlook, with the subsequent 1% pullback in futures suggesting markets are reassessing the pace and durability of any geopolitical risk premium.

Brent crude futures closed at $101.29 per barrel, registering a gain of 1.23% in the most recent trading session. The uptick marks a positive movement in global crude oil benchmark pricing.

Session Performance

The following table summarizes the key data points from the latest Brent crude futures session:

Brent crude, widely regarded as the international benchmark for oil prices, saw its futures contract settle higher during this session. The 1.23% rise brought the settlement price to $101.29 per barrel, reflecting upward momentum in the crude oil market based on the available data.