"Will the 'NACHO' trading logic be further strengthened? Morgan Stanley sets June as the 'trial date' for oil prices: if the China-US buffer is depleted, Brent crude may target $150."

As the crisis in the Strait of Hormuz enters its fourth month, Wall Street's bets on the "NACHO" (Not A Chance Hormuz Opens, meaning "no hope for the opening of the Strait of Hormuz") trading theme are gaining more and more institutional endorsements. Following Citigroup's warning that oil prices could return to $120 per barrel, Morgan Stanley has joined the camp this week with an unusually urgent report stating that the global oil market is in a "race against time" the factors that previously prevented extreme oil price spikes have not materialized, and if the blockade of the Strait of Hormuz continues beyond June, they may completely fail, leading to a new round of significant price increases. The hidden truth: How the supply-demand gap of over 9 million barrels per day was buffered In their report, Morgan Stanley analyst Martijn Rats and his team revealed a set of shocking numbers: since the end of February, with the outbreak of hostilities in Iran and the Strait of Hormuz effectively blocked by the US and Iran, the global oil market should have faced a supply-demand gap of around 9.3 million barrels per day. However, despite Brent crude futures briefly touching wartime highs of $126 per barrel at the end of April, they never exceeded the peak value after the 2022 Russia-Ukraine conflict. The "buffer mechanisms" behind this are now being dissected in detail. Morgan Stanley pointed out that two important factors combined to conceal the severity of the supply disaster: firstly, the US increased crude oil exports by 3.8 million barrels per day; secondly, China cut crude oil imports by 5.5 million barrels per day. These two forces together shielded around 9.3 million barrels per day of supply pressure from the rest of the world. Previous ship tracking data from Citigroup also corroborated this assessment. The data showed that China's oil imports in April and May may have plummeted from an average of around 11.6 million barrels per day in 2025 to approximately 9.2 million barrels per day, a decrease of 2.4 million barrels per day. This means that in a high oil price environment, as the world's largest crude oil importer, China chose to deplete its stocks, reduce spot purchases, and thus release valuable market buffering space. However, the issue is that these buffers are not infinite. Judgement day in June: When the buffers are exhausted The most striking part of Morgan Stanley's report is a clear timeframe: June. The analysis suggests that the current market's ability to maintain relative "order" with nearly 1 billion barrels of lost oil production capacity largely depends on the buffering capacity of the US and China. However, "the ability of the US to maintain such a high level of exports is hard to evaluate and seems to be under greater pressure," and if the blockade continues until the end of June or even July, the US may need to cut exports, China may also struggle to further reduce imports, and Brent crude futures prices will have to bear the upward pressure that they had previously avoided. Morgan Stanley's base expectation still assumes that the Strait of Hormuz will reopen before the US needs to cut exports and China needs to stop reducing imports. In this context, the bank forecasts spot Brent crude oil prices of $110 per barrel this quarter, $100 per barrel for the next three months, and $90 per barrel between October and December, with these predictions remaining unchanged. However, the bank also presents a cautionary bullish scenario: if the blockade continues for a longer period, oil prices could rise to the range of $130 to $150 per barrel. This forecast, echoing Citigroup's maintai...