Preheat oven to 350 degrees F (175 degrees C). Grease 12 muffin cups with shortening using a paper towel and dust with about 1 teaspoon flour or line with paper liners.

Combine 1 1/2 cups flour, white sugar, cocoa powder, baking soda, and salt in the bowl of a stand mixer. Beat 1 cup cold water, olive oil, orange juice, and vanilla extract into flour mixture on medium-low speed until batter is just combined, about 2 minutes. Fold orange zest into batter. Pour batter into prepared muffin cups, 2/3-full.

Bake in the preheated oven until a toothpick inserted into a cupcake comes out clean, about 20 minutes. Transfer cupcakes to a wire rack to cool completely, about 30 minutes.

Beat butter in a bowl using an electric mixer in medium speed until fluffy, about 1 minute. Slowly pour confectioners' sugar into creamed butter and beat until incorporated, about 2 minutes. Beat pudding mix into butter mixture until just combined. Add water, 1 tablespoon at a time, until desired consistency of icing is reached. Ice the cooled cupcakes; garnish with grated chocolate.