Earnings at the world’s largest oil companies are expected to decline later this year and into 2026, as a growing surplus in the oil market puts pressure on prices and threatens the pace of share buybacks.
Morgan Stanley is the latest major bank to lower its oil price forecasts, citing a sharper-than-expected increase in supply from OPEC+ and weakening demand. The bank now projects Brent crude to average $62.50 per barrel in the third and fourth quarters of 2025, a $5 reduction from earlier estimates.
Looking further ahead, Morgan Stanley expects Brent prices to fall below $60 per barrel in the first half of 2026. The bank attributes this to weak demand caused by tariffs and a steady rise in supply from both OPEC+ and non-OPEC producers.
As a result, the bank predicts that share buybacks at major oil firms could drop between 10% and 50%, with rising net debt across the sector.
Among European oil majors, Morgan Stanley named Shell as its top pick. The firm downgraded BP to “underweight” from “equal-weight,” citing the company’s higher debt ratio and greater exposure to economic shifts. TotalEnergies, meanwhile, is expected to see less earnings volatility due to its stronger integration across the energy value chain.
In their first-quarter results, most oil majors met or beat profit expectations and kept their dividend and shareholder return policies intact. However, BP and Chevron have already reduced the pace of share buybacks for the second quarter. Others, including ExxonMobil, Shell, and TotalEnergies, have maintained their repurchase guidance, even as oil prices weakened at the start of Q2.
Related Topics:
- USA EIA Predicts WTI Oil Prices Will Fall in 2025 and 2026
- Oil Prices Fall as EIA Reports Rising Crude Inventories
- USA EIA Unveils Updated Brent Oil Price Predictions