Strait of Hormuz choked off, Exxon warns of $150 oil — load up on oil majors Exxon and Chevron
The Iran war has shut down the Strait of Hormuz, the narrow waterway through which roughly a fifth of the world's oil flows. An Exxon executive now warns that global oil stockpiles will soon hit all-time lows, potentially driving Brent crude to $150–160 a barrel.
Idea
The Strait of Hormuz closure has choked off a huge slice of daily oil supply, and Exxon's own executive is publicly warning that inventories will soon reach emergency levels with Brent potentially spiking to $150–160 per barrel. Even if the Iran war winds down soon, analysts believe the era of cheap $60 oil is gone for good because years of under-investment in new production will keep supplies tight. Oil majors like Exxon and Chevron earn dramatically more profit at elevated crude prices, yet their stock prices haven't fully priced in a sustained period of $100+ oil. This disconnect between surging oil fundamentals and still-catching-up stock prices creates a window for buyers.