HSBC upgraded BP (LSE:BP.) and TotalEnergies (LSE:TTE) (EU:TTE) to Buy from Hold on Friday as the bank raised its oil, gas and refining assumptions and increased earnings and cash flow estimates across its global oil coverage.
Analysts led by Kim Fustier increased their Brent crude assumption for 2026 to approximately $90 per barrel from $80 and raised their 2027 forecast to $85 from $65.
The revisions reflect HSBC’s expectation of a partial and gradual recovery in flows through the Strait of Hormuz.
The bank also increased its TTF gas price forecast for the second half of 2026 to $22.50 per million British thermal units from $16.70 and raised its 2027 estimate to $17 from $12.
Earnings Estimates Raised Across Oil Sector
Following the commodity price revisions, HSBC increased its earnings-per-share estimates across the sector by an average of 19% for 2026, 65% for 2027 and 33% for 2028.
Cash flow per share estimates were raised by averages of 12%, 30% and 14%, respectively.
According to HSBC, the largest revisions were made to international oil majors because of their combined exposure to upstream production, refining and trading activities.
BP Price Target Raised to 640p
HSBC increased its price target for BP to 640 pence from 570 pence, representing a difference of nearly 18% from the share price used in the bank’s analysis.
The analysts said they expect BP “to be under much less strategic pressure to sell assets to reduce liabilities,” arguing that higher assumed oil prices mean deleveraging would be less dependent on asset disposals.
HSBC said BP shares trade at an approximately 26% discount to Shell (LSE:SHEL) and TotalEnergies on a 2027 EV/DACF basis. Its new price target assumes that valuation gap narrows by half.
The bank said it does not currently expect BP to resume share buybacks before 2028. However, the analysts said this assessment could change if management adopts “a more benign definition of ‘gearing’” that excludes hybrid securities or liabilities related to Macondo.
TotalEnergies Target Increased to €93
HSBC raised its price target for TotalEnergies to €93 from €80, representing a difference of 18.4% from the share price referenced in its analysis.
The bank said its upgrade reflected a change in relative valuation, noting that TotalEnergies’ previous valuation premium to Shell “has disappeared.”
HSBC also said TotalEnergies could increase its share buybacks in the future, although this remains an analyst expectation rather than company guidance.
HSBC Retains Buy Rating on Shell, Repsol and Chevron
HSBC maintained its Buy ratings on Shell, Repsol (TG:REP) and Chevron (NYSE:CVX).
The bank increased its Chevron price target to $250 from $218 following revisions to its cash flow forecasts. HSBC also said Chevron has “the lowest” exposure to the Middle East among the five supermajors included in its comparison.
HSBC expects Chevron to increase its annual share buyback run rate to $15 billion from between $10 billion and $12 billion.
Eni (BIT:ENI), Equinor (NYSE:EQNR), Galp (EU:GALP) and ExxonMobil (NYSE:XOM) remain rated Hold, while OMV (TG:OMV) retains a Reduce rating.
HSBC said Eni’s valuation “relative to peers is currently justified” following its year-to-date share-price performance and described the shares as “fairly valued.”
HSBC Raises Distribution Assumptions
Across its oil-sector coverage, HSBC increased its assumptions for shareholder distributions at most companies, with ExxonMobil and BP the exceptions.
The bank said its revised target prices represent an average difference of 12% from prevailing share prices across the sector and 21% for companies carrying its Buy rating.
Price targets, ratings and commodity forecasts represent HSBC analysts’ estimates and can change as market conditions and company performance develop.
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