CRUDE - zero geopolitical risk premium. Add to Shell longs

Research evidence excerpt

CRUDE - zero geopolitical risk premium. Add to Shell longs

Ian Mitchell - Specialist Sales - European Energy AC (44-20) 7134-1356 Europe Specialist Sales J P M O R G A Nian.e.mitchell@jpmorgan.com

J.P. Morgan Securities plc 31 July 2026

Ian Mitchell

+44 207 134 1356

ian.e.mitchell@jpmorgan.com

Back in May I was pretty confident we were heading for a deal in the ME and that investors should position accordingly, but then

argued post the MoU in mid-June and with Brent <$80/bbl that the risk/reward to being short oil equities was no longer attractive,

even assuming the deal held….

… which it did not, and if anything the way to a sustainable full reopening of Hormuz looks less clear now than at any point in

recent months - our call with ME expert Alex Plitsas of the Atlantic Council on Monday highlighted the difficulty of the US

reaching a durable agreement with a fractured Iranian regime (see key points from the call below) and potential for full kinetic

action to restart

In that miserable context, it is interesting that, on the estimates of JPM’s Head of Global Commodities Research Natasha Kaneva,

Brent at current $89/bbl is pricing very little geopolitical risk premium, against a fair value derived from a base case of Hormuz

reopening smoothly from June, which is clearly not the case. Natasha has not formally changed numbers yet, but examines the

upside risk to prices in Oil Markets Weekly: The Freakonomics of Oil (some points below)

Needless to say, the progression of the crisis remains key for oil equities - not just for oil, gas and product prices, but also for the

likes of SPM and Technip Energies, both of whom warned this week (see SPM, TE notes from Alejandra) as costs from the

closure of Hormuz continue to mount.