- Fuel Shortages Could Hit This Summer and Oil Execs Say Recovery Is Months Away. 3 Stocks to Own While It Lasts.
May 12, 2026
Key Points
Shell and other energy companies are warning about the impact of the Middle East conflict. High oil prices and fuel shortages are good news for these three companies.10 stocks we like better than Diamondback Energy ›
The world is still highly reliant on oil and natural gas despite the global effort to go green. The geopolitical conflict in the Middle East has left the world short 1 billion barrels of oil, according to Shell(NYSE: SHEL) CEO Wael Sawan. And the CEO believes a recovery will take months. Both estimates are backed by other industry executives.
High energy prices look set to stay for a while. And, if the conflict drags on, it could get worse. This trio of energy stocks could benefit from the global fuel shortages.
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Image source: Getty Images.
Play the long game with Shell or its peers
Elevated energy prices will help all companies that produce oil and natural gas. Shell is an integrated energy giant, like ExxonMobil(NYSE: XOM) and Chevron(NYSE: CVX). So they all produce oil, transport it, and refine it. They will all benefit from high oil prices. Chevron, however, is probably the best option, as its 3.9% yield tops those of both Shell and Exxon. Plus, Chevron has increased its dividend annually for decades, showing it can navigate the entire energy cycle while continuing to reward investors. It is a relatively conservative way to play high oil prices, since long-term investors have to accept that energy prices will eventually fall.
Go direct, but out of the conflict region
A more direct beneficiary of high oil prices will be companies that only produce oil and natural gas, such as Diamondback Energy(NASDAQ: FANG) and Devon Energy(NYSE: DVN). As an added bonus, both of these upstream energy companies are U.S.-focused, so the conflict in the Middle East won't affect their production. Both companies estimate that $90 per barrel oil will support free cash flow yields of 15%, with Devon estimating that $110 oil will increase its yield to 21%.
The opportunity and risk with companies like Diamondback and Devon is that they tend to move more dramatically in response to energy prices than integrated energy giants do. They are both well-run upstream businesses that have proven that they can survive the industry's inherent swings. However, their stocks have already risen materially, each up about 25% so far in 2026 as of this writing, so there is material downside risk if energy prices decline. When the conflict in the Middle East ends, you'll want to be ready to act if you are simply looking for a short-term trade.
Energy markets are volatile by nature
The big takeaway is that the conflict in the Middle East is worrying, but it hasn't changed the basic nature of the energy sector. Volatility is the norm. If you want to lean into that volatility, U.S. producers like Diamondback and Devon are probably good choices. If you have a long-term approach, a more diversified industry giant like Chevron will likely be a better option.
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- 5 Must-Read Analyst Questions From Chevron’s Q1 Earnings Call
May 12, 2026
Chevron’s first quarter results for 2026 were met with a negative market reaction, reflecting investor concerns about flat sales and a notable drop in operating margin, despite meeting Wall Street’s revenue expectations. Management attributed the quarter’s performance to strong upstream production—including a substantial boost from legacy Hess assets integration—and disciplined execution across volatile markets. CEO Michael Wirth highlighted operational resilience and the company’s ability to capture integration benefits between upstream and downstream operations, noting, “Our high-quality upstream and downstream portfolios delivered significant integration benefits during the quarter.” Unfavorable timing effects, particularly linked to rapid commodity price increases, weighed on downstream earnings.
Is now the time to buy CVX? Find out in our full research report (it’s free).
Chevron (CVX) Q1 CY2026 Highlights:
Revenue: $48.61 billion vs analyst estimates of $47.54 billion (2.1% year-on-year growth, 2.3% beat) Adjusted EPS: $1.41 vs analyst estimates of $0.97 (45.6% beat) Adjusted EBITDA: $10.68 billion vs analyst estimates of $10.2 billion (22% margin, 4.7% beat) Operating Margin: 8.8%, down from 12.2% in the same quarter last year Oil production: up 23.7% year on year Market Capitalization: $360.8 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Chevron’s Q1 Earnings Call
Neil Singhvi Mehta (Goldman Sachs): asked about the long-term implications of the Middle East conflict on Chevron’s planning assumptions. CEO Michael Wirth emphasized capital and cost discipline, noting it is too early to make structural changes but that consistency remains key. Arun Jayaram (JPMorgan): inquired about the impact of portfolio integration on margin capture. Wirth explained that the global enterprise optimization team has enabled Chevron to achieve higher-than-historical use of equity crude in refineries, significantly improving margin capture in volatile markets. Doug Leggate (Wolfe Research): questioned the potential for increased capital allocation to Venezuela and the Permian. Wirth replied that while the company is recycling cash flow in Venezuela, additional investment awaits greater fiscal and regulatory clarity, and any shift in the Permian would be gradual to preserve reliability. Betty Jiang (Barclays): asked about TCO’s production performance and debottlenecking progress. Wirth noted early encouraging results from recent upgrades and said more operational data is needed before providing updated guidance. Manav Gupta (UBS): sought insight into petrochemicals margin improvement. Wirth highlighted that Chevron’s ethane-based U.S. operations are positioned to benefit from better-than mid-cycle margins as pricing improves into the second quarter.
Story Continues
Catalysts in Upcoming Quarters
In the coming quarters, our analysts will monitor (1) progress on Chevron’s structural cost reduction initiatives and whether they support margin recovery, (2) execution and ramp-up of key upstream projects such as Tamar, Leviathan, and Venezuela expansions, and (3) the company’s ability to manage through commodity price volatility and unwind timing effects in downstream margins. We will also track ongoing policy developments and their impact on capital allocation.
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- Fuel Shortages Could Hit This Summer and Oil Execs Say Recovery Is Months Away. 3 Stocks to Own While It Lasts.
May 11, 2026 · fool.com
Shell and other energy companies are warning about the impact of the Middle East conflict. High oil prices and fuel shortages are good news for these three companies.
- Kinder Morgan jumps 3% after six straight sessions of losses
May 11, 2026
[Crude oil storage tanks at the Kinder Morgan terminal in Abbotsford British Columbia]
todamo
Kinder Morgan (KMI [https://seekingalpha.com/symbol/KMI]) was on track to snap six straight sessions of losses on Monday as its shares rose 2.29% to trade at $32.13, in tandem with rising oil prices.
Oil stocks, including Exxon Mobil (XOM [https://seekingalpha.com/symbol/XOM]), Chevron (CVX [https://seekingalpha.com/symbol/CVX]), ConocoPhillips (COP [https://seekingalpha.com/symbol/COP]), and SLB (SLB [https://seekingalpha.com/symbol/SLB]), also gained after U.S. President Donald Trump said the ceasefire with Iran was "on life support." Their prices were up around 2% to 3% each during afternoon trading.
Speaking from the Oval Office, Trump dismissed Iran’s response to last week’s U.S. proposal as “garbage,” saying he “didn’t even finish reading it.” Reports suggest Tehran sought sanctions relief and an end to Washington’s naval blockade while aiming to retain some influence over traffic through the Strait of Hormuz.
Prior to Monday’s gains, Kinder Morgan shares had been falling since May 1. It lost more than 3% in between May 1 and May 8. On a YTD basis, however, shares of the oil company have risen 16% in stark comparison to a nearly 8% rise in the wider S&P 500 index.
Looking at Seeking Alpha’s quant rating, KMI has been rated a Hold with a score of 3.30 out of 5. It has been rated an A- for its profitability but a D for its valuation and growth. Seeking Alpha analysts, on the other hand, were bullish on the stock and recommended to Buy it. Wall Street analysts mirrored a similar sentiment with a Buy call.
Seeking Alpha analyst The Asian Investor [https://seekingalpha.com/article/4894317-kinder-morgan-a-top-income-pick-for-2026] rated the stock as a Strong Buy following its strong Q1 earnings, driven by robust natural gas demand.
The analyst expects KMI to remain a top pick for income investors, with dividend safety and upside tied to natural gas demand and U.S. data center expansion.
“…growing natural gas demand, in part driven by a growing U.S.-based data center footprint, translates into attractive earnings prospects for investors seeking recurring dividend income from an investment-grade-rated midstream platform that is tilted towards natural gas deliveries,” the analyst wrote about Kinder Morgan.
MORE ON KINDER MORGAN
* Kinder Morgan, Inc. (KMI) Presents at Barclays 18th Annual Americas Select Conference Transcript [https://seekingalpha.com/article/4898327-kinder-morgan-inc-kmi-presents-at-barclays-18th-annual-americas-select-conference-transcript]
* Kinder Morgan: A Top Income Pick For 2026 [https://seekingalpha.com/article/4894317-kinder-morgan-a-top-income-pick-for-2026]
* Kinder Morgan: Thank Storm Fern And All Of The Cold Weather After That [https://seekingalpha.com/article/4893772-kinder-morgan-thank-storm-fern-and-all-of-the-cold-weather-after-that]
* Earnings Scoreboard: 82% of S&P 500 early reporters top EPS estimates ahead of big tech wave [https://seekingalpha.com/news/4579185-earnings-scoreboard-82-of-sp-500-early-reporters-top-eps-estimates-ahead-of-big-tech-wave]
* Kinder Morgan tops Q1 estimates as gas demand surge offsets lower fuel volumes [https://seekingalpha.com/news/4578374-kinder-morgan-tops-q1-estimates-as-gas-demand-surge-offsets-lower-fuel-volumes]
- Sunoco Q1 Earnings & Revenues Beat Estimates on Higher Sales Volume
May 11, 2026
Sunoco LP SUN reported first-quarter 2026 earnings of $2.85 per unit, up 135.5% from $1.21 a year ago. The bottom line topped the Zacks Consensus Estimate of $1.71 by 66.7%.
Total quarterly revenues of $10.7 billion surpassed the Zacks Consensus Estimate of $9.6 billion by 11.4%. The top line increased 106.4% from $5.3 billion reported in the year-ago quarter.
The strong quarterly results were driven by higher motor fuel sales volumes and increased motor fuel profit per gallon. Higher operating expenses partially offset the positives.
Sunoco LP Price, Consensus and EPS SurpriseSunoco LP Price, Consensus and EPS Surprise
Sunoco LP price-consensus-eps-surprise-chart | Sunoco LP Quote
Distribution Hike
For the first quarter of 2026, the board of directors of Sunoco's general partner declared a distribution of 98.99 cents per unit or $3.9596 on an annualized basis, marking a sequential increase of 6.25% or a 10% increase from the prior-quarter figure of 89.76 cents per unit.
The distribution is expected to be paid on May 20, 2026, to unitholders of record as of May 8, 2026.
SUN Turns Inventory Actions Into a Meaningful Profit Tailwind
SUN reported net income of $644 million in the first quarter compared with $207 million in the year-ago quarter. Operating income increased to $866 million from $296 million.
During the quarter, the partnership’s pre-tax income increased by $102 million or 54 cents per common unit, due to a LIFO liquidation, driven by reduced fuel inventories.
Segmental Performance
Sunoco posts financial results under four reportable segments after the acquisition of Parkland Corporation: Fuel Distribution, Pipeline Systems, Terminals and Refinery.
Sunoco's Fuel Distribution Leads Scale-Driven Upside
Sunoco’s Fuel Distribution segment remained the earnings engine. Revenues from external customers in the segment were $10.20 billion for the first quarter compared with $4.9 billion in the year-ago period of 2025. Segment adjusted EBITDA was $529 million, higher than the prior-year quarter’s figure of $220 million.
The segment sold 3,796 million gallons of motor fuel, up from 2,087 million gallons recorded in the year-ago period. The motor fuel margin per gallon was 17 cents compared with 11.5 cents in the year-ago quarter.
SUN's Pipeline Systems Add Stability
Pipeline Systems generated $194 million of revenues from external customers in the quarter, higher than the prior year’s figure of $173 million. Segment adjusted EBITDA improved to $179 million from $172 million a year ago, driven by market demand and improved blending economics. The positives were partly offset by higher expenses.
Story Continues
Pipelines throughput was 1,291 thousand barrels per day, up from 1,258 thousand barrels per day recorded in the year-ago period.
SUN's Terminal Segment’s Performance
In Terminals, external revenues improved to $149 million from the year-ago figure of $103 million, driven by recently acquired assets. Segment adjusted EBITDA increased to $107 million from $66 million due to contributions from the Parkland and TanQuid acquisitions.
Throughput rose to 1,013 thousand barrels per day from 620 thousand barrels per day in the first quarter of 2025.
Sunoco's Refinery Shows Its Portfolio Role
External revenues for the segment were $146 million in the quarter. Segment adjusted EBITDA totaled $43 million, including a $10 million gain on sale of inventory.
Crude throughput averaged about 21 thousand barrels per day for the quarter. Meanwhile crude utilization was 38%.
Distributable Cash Flow of SUN
The adjusted distributable cash flow totaled $535 million, up from the year-ago level of $310 million.
Sunoco's Expenses & Capital Expenditure
The total cost of sales and operating expenses increased to $9.8 billion from $4.9 billion a year ago.
The partnership incurred capital expenditures of $199 million, comprising $106 million in growth capital and $93 million in maintenance capital.
Balance Sheet of SUN
As of March 31, 2026, Sunoco had cash and cash equivalents of $718 million and net long-term debt of $13.9 billion. Meanwhile, liquidity was $2.22 billion available under the revolving credit facility, while leverage was around 4.0X.
SUN’s Zacks Rank & Key Picks
SUN currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks from the energy sector are Chevron Corporation CVX, BP plc BP and Eni S.p.A. E. CVX, BP and E currently sport a Zacks Rank #1 (Strong Buy) each. You can see the complete list of today’s Zacks #1 Rank stocks here.
Chevronreported first-quarter 2026 adjusted earnings per share of $1.41, which beat the Zacks Consensus Estimate of 92 cents.
As of March 31, 2026, CVX reported $5.3 million in cash and cash equivalents. At the quarter's end, its total debt amounted to $45.4 billion.
BP reported first-quarter 2026 earnings of $1.24 per American Depositary Share, which beat the Zacks Consensus Estimate of 91 cents.
As of March 31, 2026, BP reported $35.7 million in cash and cash equivalents. At the quarter's end, its long-term debt totaled $25.3 billion.
Eni reported first-quarter 2026 adjusted earnings from continuing operations of 81 cents per American Depository Receipt, which missed the Zacks Consensus Estimate of $1.13.
As of March 31, 2026, E had a long-term debt of €21.7 billion and cash and cash equivalents of €8.3 billion.
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- MTDR Q1 Earnings Beat Estimates on Higher Production Volumes
May 11, 2026
Matador Resources Company (MTDR) reported first-quarter 2026 adjusted earnings of $1.53 per share, down 23.1% from $1.99 a year ago. The bottom line beat the Zacks Consensus Estimate of $1.24 by 23.4%.
Total revenues were $671.6 million, down 33.8% from $1,014 million in the year-ago quarter. The top line missed the Zacks Consensus Estimate of $883.3 million by 24.0%.
Better-than-expected quarterly earnings were driven by increased total production volumes and slightly lower operating expenses. The positives were partially offset by lower natural gas price realizations.
Matador Resources Company Price, Consensus and EPS SurpriseMatador Resources Company Price, Consensus and EPS Surprise
Matador Resources Company price-consensus-eps-surprise-chart | Matador Resources Company Quote
MTDR’s Upstream Business in Q1
Matador Resources is primarily involved in oil and gas exploration and production activities in the United States. The company’s overall financial performance is heavily dependent on the oil and gas pricing environment. Most of MTDR’s production comprises oil (58% of total first-quarter production), making oil prices a major factor in determining the company’s earnings.
The average oil production was 120,277 barrels per day (Bbl/D), reflecting a 4.6% increase from the prior-year figure of 115,030. The figure also beat our estimate of 116,217.3 Bbl/D. Natural gas production was recorded at 523.9 million cubic feet per day (MMcf/D), up from 501.6 MMcf/D recorded a year ago. The reported figure came in higher than our estimate of 519.7 MMcf/D.
Total oil equivalent production in the first quarter was 207,594 barrels of oil equivalent (BOE/D), reflecting a 4.5% increase from the year-ago quarter’s figure of 198,631 BOE/D. The figure also exceeded our projection of 202,834.8 BOE/D. The company’s production volumes exceeded the midpoint of the guidance range by 3%, primarily due to the sustained outperformance of Matador Resources’ producing wells and those brought into production in the first quarter of 2026.
Matador Resources turned 36 net operated wells to production in the quarter, including a large portion in late February and March.
Matador Resources Faces Waha Gas Price Collapse
A key pressure point in the quarter was natural gas pricing. Matador’s average realized natural gas price, excluding hedging, was 64 cents per thousand cubic feet (Mcf), sharply down from $3.56 per Mcf in the first quarter of 2025. The figure came in lower than our estimate of $2.74 per Mcf. The natural gas price decline was driven by a collapse in Waha prices, which forced roughly 3,000 BOE/D in voluntary shut-ins. Winter Storm Fern forced additional well shut-ins due to freezing conditions.
Story Continues
The average sales price for oil (excluding realized derivatives) was $72.83 per barrel, up from $72.38 a year ago. The commodity price was higher than our projection of $71.74 per barrel.
MTDR’s Operating Expenses
MTDR’s midstream operating expenses increased to $2.96 per BOE from the year-earlier level of $2.90.
Lease operating costs decreased to $5.76 per BOE from $5.84 a year ago. Our projection for the metric was $5.25 per BOE. General and administrative expenses increased to $2.09 per BOE from the year-earlier level of $1.89. Our estimate for the same was $1.89.
Transportation and processing costs declined to 79 cents per BOE from $1.12 per BOE in the year-ago quarter. Taxes other than income also declined to $3.79 per BOE from $4.31 recorded in the year-ago quarter.
Overall, total operating expenses per BOE were $31.06, lower than the prior-year figure of $31.83 and above our estimate of $29.79 per BOE.
Balance Sheet & Capital Spending of MTDR
As of March 31, 2026, MTDR had cash and restricted cash of $92.5 million and long-term debt of $4,782.4 million.
Matador Resources’ first-quarter total capital expenditures were $428.1 million, which is within the company’s guidance range of $415 million to $435 million. Meanwhile, the company spent $377.4 million on well drilling, completion and equipment.
MTDR 2026 Guidance Rises
Matador Resources increased its full-year 2026 production guidance while keeping its capital budget unchanged. The company now expects full-year 2026 oil production to be in the range of 123,000-125,000 Bbl/D and total production to be between 210,500 BOE/D and 216,000 BOE/D. Total capital expenditures are unchanged at $1.45 - $1.55 billion.
MTDR’s Zacks Rank & Other Key Picks
Matador Resources currently sports a Zacks Rank #1 (Strong Buy).
Some other top-ranked stocks from the Energy sector are Chevron Corporation CVX, BP plc BP and Eni S.p.A. E. CVX, BP and E each currently sport a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Chevron reported first-quarter 2026 adjusted earnings per share of $1.41, which beat the Zacks Consensus Estimate of 92 cents.
As of March 31, 2026, CVX reported $5.3 million in cash and cash equivalents. At the quarter's end, its total debt amounted to $45.4 billion.
BP reported first-quarter 2026 earnings of $1.24 per American Depositary Share, which beat the Zacks Consensus Estimate of 91 cents.
As of March 31, 2026, BP reported $35.7 million in cash and cash equivalents. At the quarter's end, its long-term debt totaled $25.3 billion.
Eni reported first-quarter 2026 adjusted earnings from continuing operations of 81 cents per American Depository Receipt, which missed the Zacks Consensus Estimate of $1.13.
As of March 31, 2026, E had a long-term debt of €21.7 billion, and cash and cash equivalents of €8.3 billion.
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- Shell Post Q1 Earnings: Is the Stock Worth Betting on Now?
May 11, 2026
Shell plc SHEL just posted a big quarterly beat, delivering adjusted earnings of $6.9 billion in the first quarter of 2026, boosted by gains linked to the Middle East war that drove up energy prices and strong operations.
Last Thursday’s quarterly report showed higher contributions from trading and optimization, which reinforce the company’s standing as one of the strongest names in Big Oil. With shares beating both ExxonMobil XOM and Chevron Corporation CVX, and valuation sitting at a discount, the bigger question is whether this momentum can translate into meaningful upside for investors.
SHEL’s Integrated Business Drives Resilient Earnings
Shell’s diversified integrated energy model continues to demonstrate strong resilience, even during periods of heightened market volatility. In the first quarter of 2026, the company delivered adjusted earnings of $6.9 billion, supported by strong operational execution across upstream, refining and marketing businesses. It benefited from higher refining margins, robust trading and optimization contributions, strong lubricant demand, and solid upstream pricing. Importantly, Shell’s global trading platform once again proved to be a competitive advantage, helping the company capitalize on market dislocations caused by geopolitical uncertainty and supply disruptions.
The strength of this model is especially valuable in volatile commodity environments because weakness in one segment is often offset by strength in another. Management also highlighted operational excellence, including record production in Brazil and improved LNG Canada volumes. This operational consistency enhances earnings visibility and cash generation capability, making the stock attractive for investors.Shell plc
Image Source: Shell plc
Shareholder-Friendly Capital Allocation Adds Strength
Shell continues to reinforce its shareholder-friendly capital allocation strategy through consistent dividends and share repurchases. In the first quarter of 2026, the company launched a new $3 billion buyback program and increased its quarterly dividend by 5% to 39.06 cents per share, contributing to total shareholder distributions of $5.3 billion. Despite commodity-driven working capital pressures, Shell maintained a manageable balance sheet and reaffirmed its commitment to returning 40%-50% of operating cash flow to its shareholders. Management’s decision to raise the dividend amid geopolitical uncertainty reflects confidence in the company’s resilient cash-generating ability. Combined with disciplined spending, lower operating costs and improved capital efficiency, Shell offers investors an attractive blend of income potential, stability and long-term upside within the energy sector.
Story Continues
SHEL’s Operational Excellence Creates a Strong Competitive Edge
Shell continues to demonstrate strong operational execution supported by one of the industry’s most powerful trading and optimization platforms. In the first quarter of 2026, the company delivered resilient performance across key segments despite geopolitical disruptions and volatile commodity markets. Refinery utilization reached an impressive 99%, while LNG Canada ramped up production, helping offset supply challenges in Qatar and Australia. Shell’s planned acquisition of ARC Resources further strengthens its long-term production growth and LNG exposure. The company’s trading business also remained a major earnings driver, boosting profitability across refining, marketing and renewables. Alongside portfolio optimization, cost reductions and improved operational efficiency, Shell’s disciplined execution and trading expertise position the company to generate resilient earnings, stronger margins and consistent cash flows across market cycles.
SHEL’s Strong Price Performance, Estimate Revisions & Valuations
Shellhas posted an impressive performance over the past three months, with its shares rising 7.3% compared with the sub-industry’s 3.9% growth. Peer comparison further highlights the strength, as Shell conveniently outperformed its peers, Chevron and ExxonMobil, which lost 0.5% and 3.6%, respectively, during the same time period.Zacks Investment Research
Image Source: Zacks Investment Research
Over the past 30 days, the Zacks Consensus Estimate for SHEL’s earnings per share has moved higher for 2026 and 2027. The estimates have also been revised upward for CVX and XOM over the same period.Zacks Investment Research
Image Source: Zacks Investment Research
From a valuation perspective — in terms of forward price-to-sales ratio — Shell is trading at a massive discount compared with Chevron and ExxonMobil, making it attractive for investors.
Valuation ComparisonZacks Investment Research
Image Source: Zacks Investment Research
Final Verdict
Shell stands out as an attractive investment opportunity, driven by its resilient integrated business model, strong operational execution and shareholder-focused capital allocation strategy. The company continues to generate robust earnings even in volatile commodity environments, supported by its leading trading and optimization platform, high refinery utilization and growing LNG exposure. Shell’s disciplined cost management and strategic expansion initiatives further strengthen long-term cash flow visibility. At the same time, rising dividends and ongoing share buybacks highlight management’s confidence in the company’s financial strength and commitment to shareholder returns. With shares outperforming key peers while still trading at a valuation discount, Shell offers investors a compelling combination of stability, income potential and long-term upside. Overall, Shell, currently sporting a Zacks Rank #1 (Strong Buy), stands out as a compelling investment opportunity for investors seeking high yield and leverage to favorable crude dynamics, provided they can tolerate geopolitical and commodity-driven risks.
You can see the complete list of today’s Zacks #1 Rank stocks here.
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- BP Just Got a Wall Street Double Upgrade: Argus, RBC Both Turn Bullish on Recovery Story
May 11, 2026
Quick Read
BP (BP) received rare simultaneous upgrades from Argus and RBC Capital, citing Q1 earnings beat, production gains, and new CEO’s deleveraging strategy as inflection catalysts. BP’s strong cash flow and $20 billion divestment plan could narrow the valuation gap with the company’s competitors. The analyst who called NVIDIA in 2010 just named his top 10 stocks and BP wasn't one of them. Get them here FREE.
BP (NYSE:BP) just received a rare same-day double upgrade from Wall Street. Argus moved BP stock to Buy from Hold, and RBC Capital lifted the stock to Outperform from Sector Perform with a 700 GBp price target. The simultaneous bullish shift signals coordinated conviction that BP's recovery story is finally taking shape under new CEO Meg O'Neill.
For long-term investors, the calls warrant a closer look, though BP's history of false starts demands measured optimism. The dual endorsement from Argus and RBC adds credibility to a turnaround thesis that has eluded the stock for years.
Ticker Company Firm Action Old Rating New Rating Old Target New Target BP BP plc Argus Upgrade Hold Buy n/a n/a BP BP plc RBC Capital Upgrade Sector Perform Outperform n/a 700 GBp
The Analyst's Case
Argus cited BP's Q1 2026 earnings beat, increased upstream production, materially higher realized refining margins, and strong oil trading contributions. The firm flagged lower price realizations as a partial offset, yet viewed operational momentum as decisive.
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RBC's thesis leaned on structural deleveraging. The firm sees the current commodity price environment as another chance for BP to deleverage, pointing to recent exploration success and new management as catalysts that bring an "opportunity to restore investor confidence."
Company Snapshot
BP is a London-based integrated oil and gas major operating bp, Castrol, Amoco, Aral, ampm, and bpx Energy. Q1 2026 EPS came in at $1.24 versus $0.5321 estimated, a 133% surprise, on revenue of $52.26 billion.
BP CEO Meg O'Neill is targeting $20 billion in divestments by 2027 and plans to retire $4.3 billion in hybrid bonds, while reiterating FY2026 capex of $13 to $13.5 billion.
Why the Move Matters Now
BP stock has trailed U.S. peers for years, a gap our recent coverage of BP's turnaround push has tracked closely. Year to date, BP shares are up 27%, ahead of Chevron (NYSE:CVX) at 21%, Exxon Mobil (NYSE:XOM) at 23%, and Shell (NYSE:SHEL) at 16%.
Story Continues
The five-year picture still shows BP at 70% versus Exxon's 144%, leaving room to close the gap. BP's forward P/E ratio of 8x sits near Shell's 8x, and the consensus 12-month price target is $49.54.
BP's net debt rose to $25.3 billion with gearing at 25%, the overhang RBC believes can shrink in a strong commodity tape.
What It Means for Your Portfolio
For BP stock prudent investors, the dual upgrade points to a credible inflection: stronger cash flow, an active divestment program, and a CEO focused on capital discipline. The combination could support both deleveraging and the maintained $0.4992 quarterly dividend.
However, BP has had inflection point calls before. A softening in oil prices, execution slippage on the $20 billion disposal plan, or governance friction (over 18% voted against new Chair Albert Manifold) could derail the thesis.
A measured position size in BP stock makes sense while this recovery proves itself. Investors should keep an eye on the stock as oil markets and divestment milestones unfold.
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- BP, Shell, TotalEnergies Pocket Billions in War-Driven Trading Windfall
May 11, 2026
The European oil majors with the biggest trading desks raised their trading profits by up to $4.75 billion in the first quarter from the end of last year, amid extreme market volatility driven by the war in Iran.
The biggest European majors, BP, Shell, and TotalEnergies, likely earned between $3.3 billion and $4.75 billion more in the first quarter compared to the fourth quarter of 2025, the Financial Times reports, citing estimates from analysts.
Big Oil companies do not disclose their trading profits separately from the overall results, but usually comment on the performance of their trading divisions.
This past quarter, the oil and gas price spike and the heightened volatility drove strong earnings across all majors who have extensive trading desks and divisions. In this segment, Europe's biggest firms outperformed the U.S. supermajors.
Amid the worst disruption in the history of the oil markets, the European majors saw what they described as "exceptional" trading profits, which offset lost production from the Middle East.
For the U.S. majors Chevron and ExxonMobil, their earnings were more closely tied to the loss of Middle Eastern production. Still, the two U.S. firms beat analyst expectations as the oil price surge more than offset the production decline.
Shell last week reported consensus-beating earnings for the first quarter as the war in Iran drove an oil price surge and boosted trading profits at the UK-based supermajor. The company attributed the earnings bump to higher realized liquids prices and significantly higher trading amid unprecedented market volatility.
BP more than doubled its profit for the first quarter from a year earlier as oil prices jumped and oil trading boomed amid the war in the Middle East.
TotalEnergies, for its part, raised its interim dividend by 6% as first-quarter earnings jumped by 30% from a year earlier, pushed up by the spike in oil prices and very strong oil trading results in the wake of the Iran war.
By Michael Kern for Oilprice.com
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- TotalEnergies' CEO Says 500 Million Barrels Are Already Gone. Is It Too Late to Buy Oil Stocks?
May 11, 2026 · fool.com
The world has used over 500 million barrels of oil from inventory since the war began. The inventory decline will continue long after the Strait of Hormuz reopens.
