Morgan Stanley: Oil Prices Likely to Remain Elevated

Morgan Stanley warns oil prices may stay elevated indefinitely due to partial flow restrictions in the Strait of Hormuz, creating a sustained geopolitical premium.
Prolonged high energy costs could cause stagflation, with upside inflation risk and slower consumption, but not a global recession.
Policy responses expected to diverge: ECB and BoE likely tighten further, while the Fed is likely to pause and keep rates restrictive through 2027.
Energy exporters may benefit from better terms of trade, whereas import‑dependent emerging markets face fiscal strain and higher inflation.