Morgan Stanley says oil likely to fall below $25

12 January 2016

Dollar strength exerts downward pressure on crude prices

US investment bank Morgan Stanley has said oil is likely to fall below $25 a barrel due to new supply from Iran and the increasing strength of the US dollar versus the Chinese yuan.

“Given the continued US dollar appreciation, $20-$25 oil price scenarios are possible simply due to the currency,” the lender said in a note.

Morgan Stanley says a 3.2 per cent increase in the dollar implied a 15 per cent yuan devaluation, and could push down the price of oil by 6-15 per cent, or $2-$5 a barrel.

For 2016, the investment bank has forecast an average price of $49 a barrel for Brent crude.

A MEED Subscription...

Subscribe or upgrade your current package to support your strategic planning with the MENA region’s best source of business information. Proceed to our online shop below to find out more about the features in each package.

Get Notifications