JPMorgan warns of a continued surge in oil prices to $150

on Sep 23, 2023
  • Analyst Christyan Malek explains his super bullish call on oil.
  • He sees Shell and Exxon as top picks to play the energy space.
  • Both stocks have been in an uptrend over the past two months.

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Oil prices will continue to surge not just in the near term but over the next two to three years, says Christyan Malek. He’s the Global Head of Energy Strategy at JPMorgan.  

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Malek is bullish on the energy sector

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Malek raised his rating on the global energy space this morning to “overweight” citing an energy “supercycle” that could push Brent prices up to $150 by 2026.

He forecasts the imbalance between supply and demand to hit 7.1 million barrels per day by the end of this decade.

Elevated corporate breakevens, while OPEC’s falling spare capacity generates additional risk premium of ~$20/bbl based on periods in the past that have experienced reduced levels of spare capacity.

Earlier this month, Saudi Arabia – the de facto leader of petroleum exporting countries said it will continue to produce 1.0 million barrels a day less of oil through the remainder of 2023 (read more).

Malek names three oil stocks as top picks

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Other reasons cited for the super bullish call on Brent crude – the global benchmark – include Russia that announced an indefinite ban on fuel exports this week.

Rising demand and limited supply, as per the JPMorgan analyst, could keep inflationary pressures alive and make central banks leave interest rates up for longer that may weigh on capital investments into energy exploration and production.

An “accelerated transition away from hydrocarbons” will also contribute to higher energy prices, Malek added. He named Baker Hughes, Shell PLC (LON: SHEL), and Exxon Mobil Corp (NYSE: XOM) as top picks to play the potential surge in oil prices.

Note that U.S. inflation was up 0.6% last month versus 0.2% in July as Invezz reported here.

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