Morgan Stanley lifts outlook for Prio as oil tops $105

Morgan Stanley raised its estimates for Latin American oil companies after Brent crude climbed above $105 per barrel amid Middle East tensions. On Monday, September 28, 2026, Brent contracts for November jumped 4% to reach $108 per barrel. In response, the bank lifted its 2026 and 2027 EBITDA projections for the sector by between 12% and 19%.

Among Brazilian independent operators, Morgan Stanley highlighted Prio, pointing to strong expected cash generation for 2027. The bank projected a free cash flow yield of 38% for Prio in 2027, driven by successful developments at the Wahoo field that are expected to deliver a significant jump in both output and cash flow.

The bank now forecasts Brent at $100 per barrel in the fourth quarter of 2026 and an average of $97 per barrel in the second half of 2026. Morgan Stanley projects crude at $85 per barrel for 2027 and maintains a long-term estimate of $70 per barrel. The report noted that Latin American oil equities price in oil at roughly $69 per barrel, leaving room for upside even under lower commodity prices.

Petrobras remains Morgan Stanley's top pick in the regional sector with an overweight rating and an expected free cash flow yield between 13% and 17%. The bank also recommended Argentine producers YPF and Vista Oil & Gas as part of its updated coverage.