Morgan Stanley projects a 15-20% quarterly drop in European energy net income for Q4 2025. The decline reverses earlier gains, driven by weaker commodity prices and softer trading performance. Brent crude and Dutch TTF gas prices fell about 8-9% during the period, directly pressuring upstream earnings.

The forecast reflects a structurally weaker quarter marked by higher costs from infrequent items. Refining margins improved mid-quarter, but companies only partially captured this gain. Trading activity typically slows year-end, with Equinor and BP signaling neutral-to-weak results. U.S. natural gas exposure remains limited for most European firms.

Morgan Stanley estimates aggregate free cash flow at roughly $8 billion, compared to about $15 billion in buybacks and dividends. Net debt should stay stable via disposals. The bank expects modest dividend growth but anticipates both Equinor and BP will suspend share repurchases to prioritize balance sheet strength amid a cautious outlook.