Strait of Hormuz is shut and cheap oil isn't coming back — accumulate Exxon and Chevron on dips
The Strait of Hormuz — the narrow waterway that roughly one-fifth of the world's oil passes through — has been shut down since the Iran war broke out in February. Even though ceasefire talks are progressing, analysts say oil prices may stay permanently higher because the shock has permanently changed energy trade routes.
Idea
The Strait of Hormuz has been closed since February, choking off roughly 20% of global oil shipments and creating a genuine energy crisis. Even with US-Iran ceasefire talks making headlines, analysts are warning that the era of cheap $60 oil is over — the war has permanently rerouted supply chains and spooked producers. That means oil companies like ExxonMobil and Chevron are earning windfall profits that could last well beyond any peace deal. France and Spain just reported their highest inflation in two years partly because of the oil spike, which confirms the price pressure is real and filtering through the economy. Buying major oil stocks on any short-term dip is a way to position for elevated energy prices that don't look likely to normalize soon.