European oil companies are rising in early trade on higher oil prices following weekend strikes between the U.S. and Iran. Confusion regarding the Strait of Hormuz, which carries about a fifth of global oil, further boosted prices. Brent crude is up 3.6% to $78.76 a barrel, while WTI futures rise 3.6% to $73.99 a barrel. Shares of BP, Shell, Total Energies, Eni, and Equinor all saw gains.

Meanwhile, Macquarie has downgraded AGL Energy to underperform from neutral, citing a structurally oversupplied Australian electricity market. Macquarie suggests that AGL's earnings may not correct until FY29, with risks extending to FY31. The price target for AGL was lowered by 12% to 7.75 Australian dollars.

Origin Energy also faces headwinds, with Macquarie projecting an earnings hit of as much as A$340 million in FY28. This is attributed to collapsed volatility as batteries replace gas plants and markets remain in oversupply. Macquarie reduced its price target on Origin by 9.7% to 10.16 Australian dollars while maintaining a neutral call.