The Oil Gusher: Return trip around the Strait? But the future looks different from here…

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The Oil Gusher: Return trip around the Strait? But the future looks different from here…

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The Oil Gusher

Return trip around the Strait? But the

future looks different from here…

Industry Overview

Key takeaways 03 July 2026 Corrected

Equity• While spot Brent oil prices have returned to pre-war levels, we see a looser outlook for

Pan-Euro

oil demand and supply longer-term: Oils

• BofA mid-cycle outlook unchanged at $60-80/bbl. But while Big Oil shares discount

$60/bbl, they use $80/bbl for 2030 guidance Christopher Kuplent >> Research Analyst

MLI (UK)• We reiterate our preference for Oil Services as main beneficiary from more industry +44 20 7995 8222

capex both outside and behind the Strait christopher.kuplent@bofa.com

Matthew Smith >>

Research Analyst

MLI (UK)New Strait bypass? Fresh pipelines to cost only <$2/bbl +44 20 7996 7109

While last week we highlighted extra FCF near-term despite Brent’s return trip (see The matt.smith1@bofa.com

Oil Gusher: Return trip around the Strait?), this week we argue against ‘higher-for- Cian Evans-Cowie >>

longer’ – with new 4mbpd pipelines bypassing the Strait likely to cost <$10bn (<$2/bbl – ResearchMLI (UK) Analyst

see EEMEA Oil & Gas: Bypassing Hormuz: pipelines play to Middle East advantage). +44 20 7995 0940

cian.evans-cowie@bofa.com

Oil price longer-term: From OPEC floor to China ceiling?

While OPEC continues to lose members, cartel discipline and market share, China is fast

insulating itself from its historical oil dependency as it manages toward an oil price

ceiling thanks to outsized inventory as well as increasingly price elastic demand (see

Global Energy Weekly: A tale of two energy importers): See Exhibits 1-5 how China’s

increased demand elasticity has inflated oil price cushions.