The Oil Gusher: Return trip around the Strait?

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The Oil Gusher: Return trip around the Strait?

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The Oil Gusher

Return trip around the Strait?

Industry Overview

Key takeaways 26 June 2026

Equity• Big Oil shares have broadly followed Brent this week returning back to where they

Pan-Euro

started their trip around the Strait Oils

• But what has not returned? (1) 2027+ futures for Brent are still up c10%; (2) European

refining margins are still up >x2; and Christopher Kuplent >> Research Analyst

MLI (UK)• (3) Spot and 2027+ futures for Europe's TTF gas prices are still up >20%. So whose +44 20 7995 8222

cash flow outlook is now most mispriced? christopher.kuplent@bofa.com

Matthew Smith >>

Research Analyst

MLI (UK)Taking stock: Reiterate preference for quality over beta +44 20 7996 7109

The current Brent oil price strip (close to our $70/bbl forecast for 2027+) in our view matt.smith1@bofa.com

discounts a fast recovery of flows across the Strait of Hormuz: We assume a full Cian Evans-Cowie >>

recovery of transits during 3Q26. However, we believe elevated conditions vs. our ex- ResearchMLI (UK) Analyst

ante assumptions will enhance Big Oil FCF by ~$65bn across 2026-27 – compared to +44 20 7995 0940

Europe’s aggregate Big Oil market caps having returned to where they stood ex ante: We cian.evans-cowie@bofa.com

see most obvious mispricing in (Underperform-rated) Neste as the only example of its

market cap overshooting our estimated FCF uplift (see Exhibit 1 and Exhibit 2). But

across the peer group, we reiterate our sector strategy preferring quality over beta.

Quality found most mispriced in top Big Oil pick TTE

Based on our assumption of Brent back at $70/bbl from 2027 onwards, we see

TotalEnergies stick out as most undervalued among its Big Oil peer group: Near-term,

TTE offers >12.5% FCF yields vs.