Bank of America raises target prices for Chevron and ExxonMobil due to rising oil price risk premiums

2026-03-03 06:01:23

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Investing.com - U.S. banks have raised the target prices for Chevron and ExxonMobil due to geopolitical tensions driving up the global crude oil market risk premium.

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Analyst Jean Ann Salisbury stated in a report that U.S. banks have raised XOM’s target price from $135 to $151 and CVX’s from $188 to $206, “to reflect the increase in oil price risk premiums already priced into the stock.”

This adjustment was made after the U.S. carried out strikes on multiple targets in Iran over the weekend. U.S. banks noted that “there is currently no confirmed significant damage to core oil infrastructure,” but warned that key chokepoints in global energy flows have been affected.

“The main risk channel is through transportation via the Strait of Hormuz,” the bank said, citing reports that oil and liquefied natural gas tankers “received radio communications from the Iranian military stating that no ships are allowed to pass.”

According to U.S. banks, the Strait of Hormuz accounts for “about 14 million barrels per day (14%) of global oil supply and 80 million tons per year (20%) of global liquefied natural gas flow.”

While Iran’s domestic oil and natural gas production remains largely intact, disruptions in shipping routes have driven crude oil prices sharply higher. “At the market open on Sunday, Brent crude surged $10 per barrel from Friday to over $82 per barrel,” the bank wrote.

U.S. banks expect the recent impact on oil prices to be $10 to $20 per barrel, but they noted that if the Strait reopens quickly, this impact could be temporary. The bank believes “liquefied natural gas and high-beta oil stocks” will benefit the most, with refiners seeing smaller gains.

U.S. banks added that OPEC+ plans to restore 206,000 barrels per day of production in April, but these volumes also depend on whether safe passage through the Strait of Hormuz can be maintained.

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