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Morgan Stanley also believes that the disruptions in production from Venezuela will accelerate after power outages and US sanctions imposed on oil giant PDVSA. The bank cited estimates by CERAWeek's Schlumberger oil services company that Venezuelan production may have fallen between 600,000 and 700,000 barrels a day this month.
Statements by US Secretary of State Mike Pompeo and US Special Representative Brian Hook at CERAWeek also indicate that the US will allow fewer Iranian barrels into the market, Morgan Stanley said. The Trump administration has authorized eight countries to continue importing Iranian oil when the United States reinstated sanctions against the Islamic Republic in November.
Morgan Stanley expects the administration to postpone exemptions for China, India and Turkey in May and tighten the exemptions planned for Japan and South Korea. It expects the United States to allow between 900,000 and 1 million bpd of Iranian exports under the waivers, compared with about 1.2 million bpd in November.
On the demand side, Morgan Stanley said that fears of a marked slowdown in oil consumption this year now seem outdated. This view also supports Goldman Sachs' view that Brent will exceed $ 70 per barrel.
This dynamic will soon lead to a deficit in the oil market, say Morgan Stanley. The bank sees the market underfunded by 500,000 barrels a day in the second quarter, with the deficit reaching 800,000 barrels a day in the third quarter. This will support Brent at $ 75 per barrel in the third quarter.
Watch: CNA Exclusive Interview CERAWeek with Mike Pompeo and Rick Perry on CNBC
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