Global Oil Majors: Navigating a Higher-for-longer Oil Price Environment
Oil price forecasts revised upwards due to disruptions from US-Iran war. While Donald Trump has indicated that the US may exit Iran in as soon as two weeks, the situation on the ground in the Middle ...
Chief Investment Office - Hong Kong2 Apr 2026
  • Oil prices up close to 60% in the aftermath of the US-Iran war
  • Further spikes possible in case of a protracted conflict
  • Oil majors’ share prices have reacted conservatively so far
  • Downside protection stems from “higher-for-longer” oil price outlook
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Oil price forecasts revised upwards due to disruptions from US-Iran war. While Donald Trump has indicated that the US may exit Iran in as soon as two weeks, the situation on the ground in the Middle East remains uncertain. Post exit comments from Trump, Iran launched overnight attacks at Israel, Bahrain, Kuwait and an oil tanker off Qatar and United Arab Emirates. Traffic in the Strait of Hormuz remains largely closed at this point. Additionally, direct attacks on critical energy infrastructure means that, even in the event of a cease-fire, oil production in the Middle East will not return to pre-war levels for a while. Under these circumstances, we have recently raised our average annual oil price forecasts for 2026/27 and we now project Brent crude oil prices to average between USD77-82/bbl for 2026 (up from USD62-67/bbl earlier). While our base case forecast for oil price assumes a 4–6-week severe disruption followed by normalisation, a longer conflict could lead to sustained oil prices well above USD100/bbl, potentially reaching USD150/bbl or higher in the next two quarters under upside risk scenarios.

Increasing odds of higher-for-longer oil prices. What began as a logistics problem in the Gulf, with tankers unable to load and storage filling rapidly, has quickly turned into a production crisis, as Gulf countries were forced to “shut-in” production. Ultimately, the pace at which Gulf export routes normalise will be crucial for the trajectory of oil prices. As will the pace at which shut-in wells can ramp up once trade routes are back to normal. Suffice to say the “oil glut” fears prevailing since late last year is a distant memory now, and even if we reach a ceasefire in the conflict, oil prices will remain at elevated levels compared to pre-crisis levels. While a record IEA reserves release of 400mn barrels aims to provide some short-term relief, it is viewed as a temporary bridge rather than a concrete solution.

Oil majors’ share prices are slowly starting to factor this in. The energy sector is the only major S&P sector trading in the green after four weeks of conflict, but oil majors have had a relatively muted early reaction to the Iran crisis, especially in the first two weeks. Once it has become clearer that the conflict is not a short-lived one and oil price impact will be more than a fleeting one, upstream and integrated names are factoring in more optimism now. On average, the global oil majors are up around 17% since the start of the conflict, compared to 55% rise in oil prices (and 20-25% revision in average forecasts). Thus, we believe downside risks are low even if we see de-escalation anytime soon. Oil majors’ earnings are expected to benefit not just from oil price uplift, but also refined fuel spreads, spot LNG prices, and trading profits arising from high market volatility. Further share price upside cannot be ruled out if the crisis is a prolonged one, which is very much on the cards.


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