Oil companies are soon to be stuck between a rock and a hard place despite increased oil prices, according to energy analysts at J.P. Morgan.
Under pressure from consumers and governments to transition to new and greener energy sources, oil majors will have to "reinvent themselves," Christyan Malek, head of EMEA oil and gas research at the bank, told CNBC's "Squawk Box Europe" on Tuesday.
But this will increase capital expenditure and thereby hit shareholder returns, the companies' primary lure for investors, he added.
In a research note published this week, J.P. Morgan described a "trilemma" facing oil firms: traditional oil and gas revenue growth, energy transition to reduce carbon footprint, and returning surplus cash to shareholders.
And embarking on a greener path, adapting to what the bank called a "new energy order," is no longer something to be addressed in the distant future — the time for this investment is now, the note said.
J.P. Morgan's proprietary environmental, social, and governance (ESG) model suggests reducing the carbon footprint will require "significantly more investment, quicker than many realize."