Catenaa, February 04, 2026 – JPMorgan has shifted its stance on European oil majors, underscoring changing market priorities. The bank upgraded Portuguese energy group Galp to overweight. It downgraded Spanish refiner Repsol to Neutral. The change reflects a new focus on long‑term oil longevity and cash‑flow strength.
Analyst Matthew Lofting told clients that recent strategy shifts favour companies with lower production costs and strong growth optionality. He said Galp’s portfolio stands out among European integrated producers. Its offshore assets in Brazil and longer‑dated options in Namibia provide notable upside. These assets also have relatively low carbon intensity, which can attract long‑term capital.
A key factor behind the upgrade is the expected expansion of free cash flow from the Bacalhau project in Brazil. JPMorgan forecasts the project will deliver one of the sector’s strongest deleveraging profiles. The bank now expects Galp’s net debt to EBITDA ratio to fall below 0.5x by the end of 2027.
JPMorgan also highlighted Galp’s planned downstream combination with Moeve. The move could unlock upstream value and make the company more flexible operationally. Analysts see the move as a strategic advantage in a low‑growth, capital-disciplined environment.
Repsol, by contrast, has seen signs of moderating earnings momentum. While its integrated refining system and diesel exposure have historically supported strong performance, the bank now views its near‑term upside as more limited. JPMorgan trimmed Repsol’s fair value estimate and reduced its price target to reflect this outlook.
Investors are now weighing these rating changes against broader sector challenges. Surging production costs and evolving energy transitions continue to reshape the European oil landscape.
