Global energy stocks faced intense selling pressure this week after a cascade of bearish oil price forecasts from major Wall Street banks. BP, Shell, Chevron, TotalEnergies and ExxonMobil all saw their shares drop sharply as crude benchmarks retreated to multi‑month lows and the outlook for the second half of the year darkened.
Brent crude slid to around $70 a barrel and West Texas Intermediate fell to $69, resuming their decline after the United States and Iran reached a deal that reopened the Strait of Hormuz. The agreement allowed millions of barrels of previously stranded oil to start moving through the critical chokepoint, adding to an already swelling global supply.
In a note that triggered the latest sell‑off, Morgan Stanley predicted that Brent will average just $75 per barrel in the third and fourth quarters of 2026, down sharply from its earlier estimates, and will average $70 in 2027. The bank’s analysts warned of a significant global surplus as extra output from the Middle East, North America and Saudi Arabia’s pipeline network collides with weakening demand.
Other major institutions joined the revision. Goldman Sachs cut its fourth‑quarter Brent forecast to $80 per barrel from $90, while Citigroup slashed its estimate to $70. JPMorgan expects Brent to average $86 in Q3 and $80 in Q4. The banks flagged the reopening of the Strait of Hormuz and signals that the US will avoid further military escalation with Iran as key factors behind the supply boost.
The demand side is equally bleak. The International Energy Agency recently warned of “demand destruction” caused by previously elevated prices and supply disruptions. With the supply overhang likely to grow, some analysts see risks of oil falling as low as $40 a barrel later this year.
The energy sector has already felt the pain. Shell shares dipped to 2,900p, a 20% decline from the year‑to‑date high; BP dropped 22% to 472p; and TotalEnergies fell 15% to €68. In the US, Chevron and ExxonMobil each lost over 20%, while the Vanguard Energy ETF retreated from $180 to $151. The slump reflects investor expectations that second‑half profits will shrink, forcing companies to cut share buybacks. Shell, for instance, had already reduced its Q1 buyback to $3 billion after reporting a $6.92 billion profit.
With technical indicators showing momentum firmly pointing lower—Brent has broken below its 50‑day and 200‑day moving averages and its RSI has entered oversold territory—energy stocks and crude prices may face further declines in the weeks ahead as the market adjusts to a new normal of abundant supply and lukewarm demand.
