Morgan Stanley Resets View on BP and Shell Shares as Outlook Shifts

BP (LON: BP.) and Shell (LON: SHEL) received diverging calls from Morgan Stanley after the bank lifted its long-term oil assumptions and reworked its European energy sector preferences.

Analysts at Morgan Stanley said the route back to pre-conflict crude levels is narrowing and lifted their 2027 Brent forecast to $80 a barrel.

Incorporating updated commodity assumptions and expected disruption effects, the bank said it now sees 2026 earnings for the European majors running about 100% higher than previously expected, with 2027 estimates around 50% stronger.

Against that backdrop, the bank upgraded BP to Overweight from Equal Weight, raising its price target to $49.40 from $36.20. Analysts said higher-beta names stand to benefit most from the firm’s revised sector stance, which has been lifted to Attractive.

Shell moved the opposite way. Morgan Stanley cut the stock to Equal Weight from Overweight, even as it raised its price target to $95.50 from $80.20. Analysts said the reshuffle reflects a preference for companies offering greater leverage to improved commodity dynamics rather than a negative view of Shell’s fundamentals.

Repsol and Equinor also saw upgrades, while Galp Energia was lowered to Equal Weight. TotalEnergies remained an Overweight and a top pick with a higher target price.