Oil majors fall after Morgan Stanley cuts price forecast

BP, Shell and Chevron shares fell after Morgan Stanley lowered its oil price forecasts and warned of a possible global supply glut. Brent crude traded around $70 and West Texas Intermediate near $69 on Tuesday morning as tanker traffic through the Strait of Hormuz increased following a U.S.-Iran agreement to reduce attacks.

Morgan Stanley told clients it now expects Brent to average $75 in the third and fourth quarters and about $70 in 2025, down from earlier estimates. The bank cited rising supply and weaker demand as reasons for the lower outlook.

Other major banks have also trimmed forecasts. Goldman Sachs set a fourth-quarter Brent target near $80 and WTI at about $75. Citi expects averages around $75 a barrel, while JPMorgan’s 2025 outlook is about $63 a barrel.

Analysts pointed to higher production from OPEC+ members and other producers and signs of demand weakness in some regions. Some models referenced by market participants show the possibility of prices sliding toward $40 per barrel if supply momentum continues and consumption weakens.

Equity moves were pronounced. Shell shares fell to 2,900 pence on Monday, their lowest since February and about 20% below the year-to-date peak. BP dropped to 472p, roughly 22% off its high, and TotalEnergies slid to €68, about 15% below its March peak. ExxonMobil and Chevron shares each declined by more than 20% over the same period, and the Vanguard Energy ETF declined to $151 from a year-to-date high near $180.

First-quarter results varied across the majors. Shell reported a profit of $6.92 billion and cut its share buyback to $3 billion, citing the acquisition of ARC Resources. BP’s Q1 profit rose to $3.2 billion, and TotalEnergies increased its buyback by about $1.5 billion. Chevron and ExxonMobil reported weaker quarterly profits.

Investors are watching capital return policies and second-half earnings estimates. Several companies have already adjusted buybacks this year, and further price weakness could lead to additional changes in share repurchases and capital spending. Market participants expect analysts to revise earnings forecasts if oil remains near current levels.