Morgan Stanley cut its oil price forecasts as Hormuz traffic recovers

Good morning, all. Our big story this morning dives into the Public Investment Fund’s 2025 financials — its net income more than doubled, while revenues saw a 9% y-o-y jump. We also look at the latest Saudi citizen unemployment figure, which fell to its second lowest level since 2021 in 1Q.

PSAs

Work permit deadline extended to end-2026: The Human Resources Ministry extended the deadline to correct the status of expatriate workers with expired work permits — or those who have been working for more than six months without a permit — until the end of 2026. Employers and workers who haven’t rectified their situation by then will face formal action.

Tax penalty exemption extended

The Zakat, Tax, and Customs Authority (Zatca) has extended its fine cancellation and financial penalty exemption initiative for another six months, from 1 July to 31 December, according to an announcement. The extension provides exemptions for penalties related to late tax registration, delayed payments, late return filings, and VAT return correction fines.

The details: Taxpayers must be registered with Zatca, submit all outstanding tax returns, and settle the associated principal tax liabilities to qualify for the exemption. They can request installment plans, provided applications are submitted during the initiative period and payments are made according to Zatca-approved schedules.

A barrel short of bullish

Morgan Stanley cut its oil price forecasts for the second time in about two weeks, citing faster-than-expected Hormuz traffic recovery, resilient US supply, and soft Chinese demand, Bloomberg reports. The bank now sees dated Brent averaging USD 75 / bbl in 3Q (down USD 15) and 4Q (down USD 5), with all four 2027 quarters also revised lower and dated Brent seen at USD 70 by end-2027.

Why it matters: Brent futures fell about 30% this quarter as the US-Iran peace agreement opens the door for more tanker traffic through Hormuz. Morgan Stanley estimates flows only need to recover to about 65% of pre-conflict levels to balance the market in 2027, suggesting prices still have room to fall. Goldman Sachs also cut its outlook, and bearish signals like contango pricing — where future prices trade above spot — point to a market already pricing in a glut.

The bearish turn is broadening: The downgrade comes as analysts cut their 2026 oil price forecasts for the first time since the Iran war began, according to a Reuters poll. The survey lowered its average Brent forecast to USD 84.5 / bbl from USD 90.4 a month earlier. The shift reflects growing expectations that the market is heading back into surplus, with analysts expecting Opec to continue gradually raising production.

Romoz wants a Nomu listing

Arabian Romoz Co. got the green light to register and offer 950k shares — 11.95% of its share capital — on the parallel market Nomu, according to a Capital Markets Authority (CMA) statement.

Another real estate firm heads to the parallel market… The announcement landed the same month as another real estate firm, MSGA Investment Company, headed to Nomu, floating 11.1 mn shares — equivalent to 10% of its IPO capital of 111.1 mn shares.

That’s not all: Al Manhal Company also got the CMA’s thumbs up to register and offer 900k shares — 15% of its share capital — on Nomu, according to a separate CMA statement.

… while IPOs are almost on ice: We saw issuers shelving IPOs amid geopolitical jitters. Mutlaq Al Ghowairi Contracting parked its SAR 3 bn Tadawul listing, while Arabian Dyar is reportedly pulling its IPO, once pitched near a SAR 16 bn valuation. Both are said to be rattled by demand worries after the strikes on Kuwait and Bahrain.

WB merger in (more) hot water

The UK government may halt Paramount Skydance’s Gulf-backed USD 110 bn takeover of Warner Bros Discovery over media ownership concerns, Bloomberg reports, citing a letter (pdf) from the Department for Culture, Media, and Sport. Although no final decision on intervention has been reached, Secretary of State for Culture Lisa Nandy may prompt regulators to investigate the transaction, adding another hurdle to the merger. Nandy has given Paramount and Warner Bros. until 6 July to respond.

REMEMBER- The deal puts CBS-owner Paramount in control of the larger Warner family, home to HBO and CNN. The Public Investment Fund, the Qatar Investment Authority, and Abu Dhabi’s L’imad Holding are partially bankrolling the transaction with some USD 24 bn in equity.

What’s next? Weeks after the US Justice Department closed its eight-month antitrust probe into the merger, the European Commission must conclude two parallel reviews. This includes a Phase 1 merger check due 7 July and a Foreign Subsidies probe targeting the Gulf money due 14 July.

Data point

97.7% — that’s the percentage of Saudi residents saying they feel safe walking alone in their neighborhood at night, according to Gastat data submitted to the UN Sustainable Development Goals Indicators Database. This percentage puts the Kingdom first among G20 countries for public safety perception.

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The big story abroad

How yesterday’s talks between the US and Iran unfolded: US negotiators Jared Kushner and Steve Witkoff held “positive” talks with regional leaders in Qatar, indicating that technical talks are proceeding. This followed reports that Tehran’s representatives would refuse to meet the envoys, with Iranian officials saying the terms of the ceasefire must be sorted out before tackling the issue of the Islamic Republic’s nuclear program.

International dailies are zeroing in on US President Donald Trump’s annual financial disclosure, which reveals at least USD 1.4 bn in earnings from crypto and crypto-related ventures. The report highlighted almost USD 600 mn made from sales by World Liberty Financial, a crypto firm co-founded by Trump, his sons, and Witkoff.

Wall Street just finished its best quarter since 2020, as optimism over a long-lasting peace agreement for the US-Iran conflict bolsters investor confidence. The S&P 500 closed up by 0.8% at around 7.5k, while the Dow Jones rose 0.3% at 52k.

Chip stocks also had a good quarter — they closed out their best quarter ever, jumping 88% during the three-month period. We have more in this morning’s Planet Finance, below.

Meanwhile, in the AI world: Anthropic launched Claude Science, an AI ​research workbench which integrates tools and computer resources geared towards scientists and researchers. It can render artifacts like 3D protein structures, genome tracks, and chemical structures.