-- RBC Capital Markets has raised its commodity price outlook due to the potentially long-lasting impact of the conflict between the US and Iran.
The analysts said the tightening of supply and demand fundamentals has prompted them to raise their 2026-2028 equilibrium price for Brent/WTI by $10 to $80/$75 and Henry Hub natural gas by $0.25 to $4.00 per million cubic feet.
"This move reflects ongoing collateral damage in the Gulf region and a rising call on barrels globally from an energy security standpoint," RBC's research note said.
It added that share buy-back activities were likely to slow given the recent sharp rise in equities valuations, up by more than 50% in the calendar year so far.
In terms of trading ideas, RBC highlighted ConocoPhillips (COP) and EOG Resources (EOG) among large players, California Resources (CRC), Permian Resources (PR) and Chord Energy Group (CHRD) among small to medium and Expand Energy Corp (EXE) in gas.
RBC said it had raised its EPS-to-cash flow per share estimates by an average 45% to reflect its revised commodity price expectations with oil players in this basket generally up closer to 55%.
In keeping with this, price targets have been raised 27% on average, the note said.