Is Peace Mispriced?

Research evidence excerpt

Is Peace Mispriced?

Idea

June 16, 2026 04:01 AM GMT

Morgan Stanley & Co. LLCMEnergy | North America Devin McDermott

Equity Analyst and Commodities Strategist

Is Peace Mispriced? Devin.McDermott@morganstanley.comJoe Laetsch, CFA +1 212 761-1125

Equity Analyst

Joe.Laetsch@morganstanley.com +1 212 761-8804

With a MoU between the US and Iran set to be formally signed Svetlana Do

on Friday, we refresh sensitivities for our E&P & Integrated ResearchSvetlana.DO@morganstanley.comAssociate +1 212 761-2409

coverage and revisit what's priced in. Oil E&Ps currently trade at Helen Lin

Research Associate

a 13% median '27 FCF yield near strip ($72 WTI). Intrinsically, Helen.Lin@morganstanley.com +1 212 761-0766

valuations reflect $66 WTI. Justin W Latran, CFA

Justin.Latran@morganstanley.com +1 212 761-2869

Key Takeaways Jacqueline M Kenny

Including today's move, WTI has now fallen by 29% since the US and Iran first Jacqueline.Kenny@morganstanley.com +1 212 761-2253

announced a cease fire in early April, a ~$30/bbl decline. Exploration & Production

Fully restoring production & inventories will take time. MS oil strategist expects North America

Industry View In-Line

Brent to be supported around $90 in 3Q and at or above $80 into next year. Integrated Oil

North America

At strip (~$72 WTI), we estimate median 2027 FCF yield of 11% for our oil Industry View Attractive

coverage (13% for US oil E&Ps, 8% for US Majors, and 9% for Canada). Diversified Natural Gas

Intrinsically, we estimate oil producer valuations reflect an average WTI price of ~ Industry View In-Line

$66/bbl, or ~13% below 12-month strip of ~$75/bbl.

With strong FCF & attractive valuations, the pull-back creates an opportunity to

add exposure to Majors and high-quality E&Ps

Peace deal, pending release.