Morgan Stanley Forecasts Oil's Next Big Move

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Oil and Energy Market Context - Macro Drivers

Key macro instruments that drive oil price movements - dollar, yields, risk appetite

DXY

US Dollar Index

99.04 pts

▲ 0.24 (+0.24%)

headwind for oil

Oil priced in USD — rising dollar pressures oil

WTI

WTI Crude Oil

84.90 $/bbl

▼ 2.16 (-2.48%)

negative for oil

US benchmark crude price

BRENT

Brent Crude

92.16 $/bbl

▼ 2.23 (-2.36%)

negative for oil

Global benchmark crude price

NAT GAS

Natural Gas

2.83 $/MMBtu

▲ 0.05 (+1.88%)

positive for oil

Henry Hub natural gas price

XLE

Energy Sector ETF

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negative for oil

Energy sector equity benchmark

SPX

S&P 500

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▼ 23.47 (-0.31%)

negative for oil

Broad risk appetite indicator

▲ Rising DXY or yields typically pressure oil prices | ▲ Falling yields or geopolitical risk support energy markets | Live data - fetched at send time

Market Commentary

Morgan Stanley Forecasts Oil's Next Big Move

Morgan Stanley's assessment of oil's impending trajectory underscores a pivotal shift in the market dynamics, primarily driven by diminishing supply buffers that are tightening the balance between supply and demand. As global inventories dwindle, the risk of price volatility escalates, suggesting that oil prices could experience significant upward pressure in the near term. This scenario is compounded by geopolitical tensions in key producing regions, which could further disrupt supply chains and exacerbate the already precarious situation. The anticipated increase in demand, particularly from recovering economies and the ongoing transition towards energy security, aligns with this tightening supply narrative, creating a perfect storm for higher prices. Additionally, OPEC's strategic production cuts have effectively reinforced this trend, limiting output in an effort to stabilize prices, which may inadvertently lead to a supply crunch if demand continues to outpace production capabilities. Investors should closely monitor these developments, as the interplay between reduced inventories and geopolitical uncertainties could lead to sharp price movements. The refining sector may also feel the impact, as margins could be squeezed if crude prices rise significantly without a corresponding increase in refined product prices. In this context, energy investors must recalibrate their strategies, as the landscape is shifting towards a more bullish outlook for oil, driven by fundamental changes in supply dynamics and external geopolitical factors. Overall, the market is on the cusp of a significant transition, and those positioned to capitalize on these trends could see substantial returns as the next big move in oil unfolds.

The 60 Day Peace Window Closed, and Trump’s Iran Strategy May Shift Dramatically

The closure of the 60-day peace window signals a pivotal moment for oil markets, particularly as tensions between the U.S. and Iran are poised to escalate once again. With the potential for a shift in U.S. strategy under President Trump, the specter of renewed sanctions or military action looms large, which could disrupt Iranian oil exports and exacerbate supply constraints in an already tight market. Iran's ability to navigate these geopolitical challenges is critical, as its crude production has been gradually recovering, yet remains significantly below pre-sanction levels. Should the U.S. adopt a more aggressive stance, we could see a sharp increase in risk premiums on oil prices, particularly Brent, which is sensitive to geopolitical disruptions. Moreover, the broader implications extend beyond just the Iranian context; OPEC+ is already grappling with its own production cuts and the need to balance supply with the recovering demand post-pandemic. Any disruption in Iranian supply could lead to a scramble for crude among other OPEC members, potentially pushing prices higher as they attempt to fill the void. Additionally, the global energy landscape is still reeling from the impacts of the Russia-Ukraine conflict, which has already strained supply chains and heightened volatility. Investors should brace for a period of uncertainty as markets react to the shifting geopolitical dynamics, with the potential for significant price swings in the coming months. The interplay between U.S. foreign policy and Middle Eastern oil production will be crucial in shaping the trajectory of energy prices, making it imperative for market participants to stay attuned to developments in this arena.

Iran-Linked Cyberattack Tests Britain’s Energy Defenses

The recent cyberattack linked to Iranian hackers on a UK energy facility underscores a growing vulnerability in global energy infrastructure, which could have significant implications for oil prices and market stability. While the facility targeted was described as a small-scale generator, the incident highlights the potential for larger, more impactful attacks that could disrupt critical supply chains and energy production. As geopolitical tensions escalate, particularly between Iran and Western nations, the risk of further cyber intrusions could lead to heightened market anxiety, driving speculative trading and volatility in oil prices. Investors should be particularly vigilant as any successful cyberattacks on more significant facilities could lead to immediate supply disruptions, prompting price spikes reminiscent of past geopolitical crises. Additionally, the incident serves as a reminder of the interconnectedness of energy markets; disruptions in one region can have ripple effects globally, affecting everything from refining margins to LNG exports. The resilience of energy infrastructure is now a crucial factor for market participants, as the potential for cyber warfare becomes an increasing reality in the energy sector. As nations bolster their cybersecurity measures, the costs associated with these enhancements could also influence operational expenditures in the oil and gas industry, potentially leading to higher prices for consumers. In this environment, the balance of supply and demand could be further strained, especially if investor sentiment shifts toward a more risk-averse stance. Overall, the implications of this cyberattack extend beyond immediate security concerns, signaling a need for heightened awareness and preparedness in the face of evolving threats to energy stability.

Goldman Sachs: Europe Needs Much Higher Gas Prices to Secure Winter Supply

The assertion that Europe requires significantly higher gas prices to secure winter supply underscores the precarious state of the continent's energy landscape, with direct implications for oil prices and broader energy markets. As European nations grapple with dwindling natural gas inventories amid geopolitical tensions in the Middle East, the likelihood of elevated gas prices could lead to a cascading effect on oil demand, particularly as countries pivot to oil as an alternative energy source. The competition for liquefied natural gas (LNG) is intensifying, especially as Europe finds itself outbid by Asian markets, which are willing to pay a premium to secure supplies. This shift not only threatens Europe's energy security but also places upward pressure on oil prices as utilities may increasingly turn to oil-fired power generation to compensate for gas shortages. Furthermore, the potential for higher gas prices could stoke inflationary pressures across the European economy, leading to reduced consumer spending and economic slowdown, which in turn could dampen overall energy demand. The situation is exacerbated by the absence of Qatari LNG volumes, which has historically provided a stabilizing influence in the market. As Europe heads into winter, the urgency to fill storage facilities becomes paramount, and any failure to do so could lead to severe supply constraints, pushing prices even higher. This scenario not only complicates the energy transition efforts but also highlights the fragility of the current energy supply chain, making it clear that geopolitical stability is crucial for maintaining balance in global energy markets. Investors should brace for volatility as these dynamics unfold, with oil prices likely to react sharply to any developments in the ongoing crisis and the broader competition for LNG.

NEW STRATUS ENERGY | TSXV: NSE

Oil and gas exploration and development in Brazil's prolific LATAM basins.

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New Stratus Energy Announces Venezuela and Colombia Updates

(TSXV:NSE) New Stratus Energy Inc. is providing an update on its activities in Colombia and Venezuela, focusing on securing oil & gas properties under the renewed Venezuelan hydrocarbons legal regime and evolving licensing and authorizations by the Office of Foreign Assets Control of the Department of the Treasury of the United States of America. The Corporation has identified and assessed oil & gas assets in Venezuela, including the 2024 acquisition of working interests in several fields, which were relinquished due to non-compliance by state-owned entity counterparties and tightening international sanctions. The Corporation has incorporated in the United States of America a fully owned subsidiary called NEW STRATUS ENERGY US LLC, a U.S. entity with an operating subsidiary in Venezuela, and registered with the center for Productive International Investments. NSE has entered into memoranda of understanding with potential partners cleared in principle by the U.S. and/or the Government of Venezuela for being awarded oil & gas rights and has exclusivity and non-disclosure agreements to evaluate certain oil & gas assets. NSE is conducting technical due diligence and project assessment after receiving access to data packages from relevant state-owned entities and has visited field facilities prior to negotiations with Petroleos de Venezuela S.A. In Colombia, NSE has entered into a joint venture agreement with a local operator, approved by the Agencia Nacional de Hidrocarburos in Colombia, to jointly operate existing oil and gas production blocks, with the definitive agreement expected to be signed after the official government transition on August 7, 2026. Additional oil and natural gas operated production blocks are being evaluated in Colombia as the new administration provides a more robust environment for hydrocarbon exploration & production projects.

Zephyr Energy: Paradox Project Update

(AIM: ZPHR) Zephyr Energy plc has elected to fund additional engineering and well work to prepare for a higher production rate during the initial phase of the Paradox project in Utah, U.S. Engineering work is underway to design a modular gas processing system with up to 15 million standard cubic feet of gas per day of production capacity. The State 36-2 LNW-CC-R well achieved a peak flow rate of 2,848 barrels of oil equivalent per day during a 2025 production test. The Federal 28-11 well produced over 0.36 billion cubic feet of natural gas and circa 93,000 barrels of oil prior to being shut-in. An independent 2025 Competent Persons Report by Sproule International confirmed 2P reserves of 35.3 million barrels of oil equivalent and total recoverable resources of 74.2 million boe within the White Sands Unit. Zephyr holds a portfolio of non-operated production interests across the Williston and other Rocky Mountain basins, supported by a US$100 million strategic partnership. The company continues to progress both the potential farm-out and the proposed US$15 million commodity purchase agreement.

Quantum Helium: Sagebrush Update & Colorado Drilling Opportunities

(AIM: QHE) Quantum Helium Limited is providing an update on engineering work at its Sagebrush Project (90% Working Interest) and on additional drilling opportunities across its Colorado portfolio. The initial Sagebrush-1 Extended Production Test confirmed helium-bearing gas at approximately 2.5%, strong reservoir connectivity, rapid pressure recovery, and commercial oil in the Leadville Formation. Quantum expects the next programme to use a more extensive stimulation treatment to increase contact with the natural fracture network and improve sustained flow rates. Permit applications are being prepared for the near-term Little Ute SE and Yellow Jacket SE oil targets in the Sagebrush project area. Three larger follow-on prospects have also been identified: Mariano Wash SE and Sagebrush East within Quantum's existing project areas, and Lula within adjacent acreage. Quantum holds independently assessed gross 2U helium resources of 1.104 Bcf at Sagebrush and Coyote Wash. The company has provided all requested documentation for its proposed OTC Markets listing in the United States, with the application confirmed to be in good standing and the review process nearing completion.

Jade Gas Defines Production Licence Area as TTCBM Moves Towards Development

(ASX: JGH) Jade Gas Holdings has lodged its initial Plan for Development of Operations (PDO) with Mongolia’s regulator and signed an agreement for a proposed Production Licence area for its flagship TTCBM project. The agreed footprint covers about 80% of Jade’s existing 629-square-kilometre Exploration Licence and includes the Red Lake development area as well as the prospective Vista and Brownhill resource areas. Jade has submitted the PDO to the Mongolian Minerals Reserve Council, which will assess the development framework covering drilling, dewatering, gas production and long-term management of field operations. Approval of the PDO would represent another regulatory milestone following certification of the maiden CBM reserves, which formally moved Jade from explorer to developer in June 2026. Jade and the Mongolian regulator have agreed on the proposed 502km² Production Licence area, leaving formal granting of the licence as the next tenure step. The project is operated and managed through Methane Gas Resource LLC, a joint venture company with the Mongolian government. Jade’s longer-term strategy is to supply gas to Mongolia’s power and heavy vehicle transport sectors, initially in the South Gobi, through compressed natural gas or liquified natural gas projects.

Omega Oil & Gas Extends Taroom Trough System With Canyon-3

(ASX:OMA) Omega Oil & Gas has strengthened the case for a large oil and gas system in Queensland’s eastern Taroom Trough after its first 2026/27 appraisal well intersected six oil and gas-bearing Permian reservoirs. Canyon-3 reached 3,792.6 metres and returned a 526m oil and gas-bearing interval containing 170m of aggregate net pay, with the primary Canyon Sandstone target outperforming the equivalent interval in Canyon-1. The well encountered 18m of net oil-bearing sands averaging 11.5% porosity within a 42m gross Canyon Sandstone interval, making the reservoir 14% thicker with 55% higher porosity than at Canyon-1. Omega also identified enhanced reservoir properties in the overlying Lower Kianga Sandstone, which it now interprets as a sixth regionally extensive reservoir layer across its acreage. The Canyon Sandstone has previously demonstrated oil and gas flow at Canyon-1H, which delivered 987 barrels of oil per day and 1.45 million standard cubic feet per day, normalised to a 2,000m horizontal well. Results indicate the Canyon Sandstone extends at least 20km east-west from Canyon-1 through Canyon-3 towards the Cabawin oil field, with regional well data indicating continuity for more than 40km north-south from Canyon-2 to Tasmania-1 and another 40km northwest to Fantome-1. SLB modelling based on Canyon-1 and Canyon-1H data indicates a single 2,000m horizontal development well at 1,000m spacing in the Canyon Sandstone could deliver a 10-year estimated ultimate recovery of about 0.95 million barrels of oil equivalent, or 5.72 billion cubic feet of gas equivalent.

Pure Energy Minerals Enters Into LOI to Acquire Railroad Valley Lithium Brine Property in Nevada

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IsoEnergy Signs Exploration Agreement With Kineepik Métis Local to Support Responsible Uranium Exploration in Saskatchewan

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Atomic Eagle Re-Establishes 60% Operating Interest in Madaouela Uranium Project

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Thermal Energy Wins Three Heat Recovery Orders Totalling $2.1 Million With Global Nutrition Company

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Societatea Energetica Electrica S.A: Electrica Signed Contract for Cogeneration Plant

(LSE: ELSA) Societatea Energetica Electrica S.A. signed the contract for the development in Craiova of a new high-efficiency cogeneration plant based on natural gas internal combustion engines. The plant will supply thermal energy to Craiova's centralized district heating system (SACET) and electricity to the National Power System. The project provides for an installed electrical capacity of approximately 82 MW and a thermal capacity of around 179 Gcal/h (approximately 208 MWt), generated through high-efficiency cogeneration. The plant will be equipped with a thermal energy storage capacity, allowing the decoupling of heat generation from electricity production. The engines are designed to operate on natural gas, with the capability of running on a hydrogen blend as it becomes available at an industrial scale. The unit is engineered to reach full capacity within approximately two minutes from startup and synchronize with the grid in under 30 seconds. The project will be executed in two phases: the first phase involves the installation of the hot water boilers (HWBs), and the second phase will see the commissioning of the cogeneration engines.

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