July 23rd, 2026 | 08:10 CEST
A Renewed Flare-Up of the Iran Conflict Fuels the Oil Industry: BP, Zefiro Methane, and Shell
The renewed escalation in the Middle East is having an immediate ripple effect on the oil and gas markets. Even the mere possibility of disruptions to shipping lanes or energy infrastructure is driving up prices and increasing the risk premium. For investors, this mix of sudden volatility and structural scarcity opens up a lucrative playing field. Those who correctly interpret the various business models can profit more than average from the current market movement. A look at BP, Zefiro Methane, and Shell reveals where the greatest leverage lies for investors in the oil industry.
time to read: 5 minutes
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Author:
Armin Schulz
ISIN:
ZEFIRO METHANE CORP | CA98926D1069 | NEO: ZEFI , BP PLC DL-_25 | GB0007980591 , Shell PLC | GB00BP6MXD84
Table of contents:
Author
Armin Schulz
Born in Mönchengladbach, he studied business administration in the Netherlands. In the course of his studies he came into contact with the stock exchange for the first time. He has more than 25 years of experience in stock market business.
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BP: With Economic Tailwinds
As of July 1, BP is streamlining its operational structure from three to two segments: Upstream and Downstream. CEO Meg O'Neill is thus advancing her vision of a focused oil and gas strategy. Investments in alternative fuels will be drastically reduced from over USD 5 billion to just USD 1.5–2.0 billion annually. Instead, approximately USD 10 billion will be channeled into oil and gas production. An ambitious divestment program is running in parallel. Divestments totaling USD 20 billion are expected to be completed by 2027. A concrete example is the sale of the Austrian mobility business, comprising 250 gas stations, to the Swiss company Volenergy AG.
The mid-July earnings release paints a mixed picture. BP continued to benefit from higher oil prices in the second quarter; however, it remains to be seen until the official figures are released whether the average Brent price was higher than in the first quarter, when it stood at USD 103.85 per barrel. The refining margin nearly doubled. The positive price effects are expected to improve operating income by up to USD 2.1 billion. On the other hand, upstream production is declining to 2.17–2.22 million barrels, due to maintenance work and the conflict in the Middle East. Net debt is falling to USD 22–23 billion, a reduction of up to USD 3.3 billion.
Analysts' assessments are mixed. Berenberg lowered its price target slightly but raised its earnings forecasts for 2026 by 9%. Mizuho initiated coverage with a "Buy" recommendation and a price target of USD 51 per ADR on the NYSE. For investors, BP remains a mixed bag. The strategic realignment is expected to improve cash flow generation in the medium term, but transformation costs running into the billions continue to weigh on the company. Dependence on volatile crude oil prices and geopolitical risks persists. August 4, 2026, the date of the full quarterly earnings release, will be a key indicator. The share is currently trading at around EUR 6.309.
Zefiro Methane: The Billion-Dollar Business in America's Legacy Sites
Zefiro Methane is unaffected by oil price fluctuations caused by the war in Iran, which makes its business model particularly attractive to investors. The company specializes in decommissioning abandoned and orphaned oil and gas wells in the US—a billion-dollar business and a massive market opportunity. While the US has allocated USD 4.7 billion for remediation, the actual need is estimated at USD 400 to 600 billion. This gap between government funding and necessary investments creates a structural supply shortage that benefits specialized service providers like Zefiro.
In July, Zefiro entered into a strategic partnership with the renowned nonprofit organization Well Done Foundation. The first contract involves plugging 10 wells in the Deep Fork National Wildlife Refuge in Oklahoma, with an option for an additional 20 projects. This collaboration opens doors to new states and establishes Zefiro as the preferred service provider in the 18 US states where the Well Done Foundation is active. As early as June, the company had expanded its operations to focus on energy infrastructure projects, such as plugging legacy wellbores for AI data center construction. In addition, its subsidiary Plants & Goodwin secured contracts worth USD 2.4 million from the state of Ohio. This is a clear indication of growing demand in the sector.
The GBC study sees Zefiro on a solid growth trajectory. The new management has realigned the company's operations, improved margins, and reduced debt. For the current fiscal year, revenue of approximately USD 45.18 million and positive EBITDA of USD 3.73 million are expected. GBC's price target is CAD 2.12. The biggest risk remains the acute shortage of skilled workers. The company is addressing this issue with its own training programs and above-average salaries. Investors here are betting on a growing, government-subsidized market with an established player that has positioned itself in a well-protected niche. The share is currently trading at around CAD 0.65.
Shell: Between Geopolitical Turmoil and Realignment
Under CEO Wael Sawan, Shell is undergoing a remarkable shift in strategy. The company is moving away from costly renewable energy projects. The sale of the Indian Sprng Energy portfolio to Aditya Birla brings in USD 1.8 billion, while the divestiture of the South African fuel retail division to ADNOC adds billions more to the company's coffers. At the same time, shareholders have approved the acquisition of the Canadian gas producer ARC Resources. This is a clear commitment to the gas business. The CO₂ targets have been adjusted. Instead of a 20% reduction in net carbon intensity by 2030, Shell is now aiming for 15–20%.
The second quarter presents a mixed picture. Production in the integrated gas division plummeted to 610,000 to 650,000 barrels of oil equivalent per day (boe/d) due to the attack on Ras Laffan in Qatar. This represents a massive decline from 909,000 boe/d in the first quarter. Repairs to the Pearl Gas-to-Liquids plant in Qatar could take over a year. This is offset by excellent trading results. Volatility resulting from the Middle East conflict is bringing significant gains to the trading business. Indicative refining margins are rising to USD 20 per barrel, and chemical margins to USD 240 per metric ton. Operating cash flow generation is returning to growth, with an expected working capital inflow of USD 1–6 billion.
Shell's annual LNG outlook paints an impressive long-term picture. Global demand is expected to rise by about 65% to nearly 700 million metric tons per year by 2050, driven by Asia. However, the current situation remains tense. The European TTF gas price averaged EUR 46 per megawatt-hour in the second quarter, a significant increase compared to previous quarters. With its project in the Bahamas and plans for the Dragon offshore gas production in Venezuela, Shell is strategically positioning itself for future growth. Shareholders can look forward to an increased dividend of EUR 0.3381 per share, while the share buyback program continues as planned. The share is currently trading at approximately EUR 38.795.
The renewed escalation in the Middle East is driving up the risk premium in the oil market and rewarding investors who correctly interpret the industry's various business models. BP is focusing on operational streamlining and benefiting from higher refining margins, but is struggling with declining production. Zefiro Methane presents itself as a crisis-resistant niche player that benefits from billion-dollar environmental remediation projects in the US regardless of the oil price. Shell, on the other hand, is leveraging geopolitical upheavals for its trading business and is consistently focusing on gas, while production in Qatar is suffering.
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