Morgan Stanley projects 75% Middle East oil production recovery over four months if Strait of Hormuz reopens

Investing.com -- Morgan Stanley analysts project that if the Strait of Hormuz reopens, Middle East oil production could see a 75% recovery over a four-month period, according to a research note released Monday.

The firm's oil strategists anticipate a significant shift in Strait of Hormuz oil exports beginning in late July, with three-quarters of production returning over the following four months.

According to Morgan Stanley, several obstacles must be addressed before the market can fully normalize following any potential agreement between the United States and Iran. These include mine clearing operations, resolving tanker backlogs, relieving storage facility constraints, and restarting oil fields.

The bank noted that shipowners and insurance providers will need to regain confidence in the safety of navigating the Strait before operations can return to normal levels.

Morgan Stanley expects the oil market to remain tight during the third quarter as these bottlenecks are resolved.

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