HSBC raises ratings on Chevron and BP, with Middle East impact prompting upward revisions of profit forecasts

LootboxPhobia · 2026-03-20T21:02:57+00:00

HSBC upgraded its ratings and target prices across the integrated oil sector, citing Middle East supply disruptions that significantly revised 2026 earnings forecasts upward. Average target prices increased 22%, with Chevron upgraded to Buy, while BP and other companies also saw target price increases, as oil and gas prices are expected to rise further. Despite production losses, HSBC believes elevated oil and gas prices will help offset the impact, though it cautioned that valuations are becoming reasonable.

LootboxPhobia

2026-03-20 21:02:57

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Investing.com - HSBC has issued a series of upgrades and target price increases for the integrated oil sector, stating that Middle East supply shocks have led to a “significant upward revision” of earnings forecasts for 2026 and 2027.

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Senior analyst Kim Fustier said the bank has upgraded Chevron to a buy rating, BP to a hold rating, and downgraded Galp to a hold rating, while maintaining a neutral or cautious stance on ENI, Equinor, Repsol, Shell, TotalEnergies, and ExxonMobil.

The sector’s average target price has been raised by 22%, with BP’s target price increased to 565 pence, Chevron to $215, ExxonMobil to $158, Shell to 3,350 pence, TotalEnergies to EUR77, Galp to EUR21, Western Oil to $68, and ENI to EUR21.

HSBC pointed out that since February 28, the actual closure of the Strait of Hormuz has caused an “unprecedented physical supply disruption” in the oil, refining, and liquefied natural gas markets.

The bank has significantly raised its macro assumptions for 2026, increasing Brent crude oil prices from $65 per barrel to $80 per barrel, European TTF natural gas prices from $10 per million British thermal units to $14 per million BTU, and refining margins by 50%.

Although many oil giants face production losses due to regional exposure, HSBC said these are “more than offset by higher oil and gas prices.”

Companies with limited Middle East exposure, such as Equinor, Repsol, and ENI, saw the largest gains.

HSBC now expects earnings in 2026 to be on average 50% higher, with a 13% increase in 2027 forecasts, especially for oil-sensitive companies like BP, Chevron, Repsol, and natural gas producers like Equinor, which have the largest upward revisions.

Nevertheless, HSBC warns that valuations “appear broadly reasonable,” with stock prices close to historical highs, although the strong commodities momentum “is likely to drive stock prices higher.”

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