Oil surges on US-Iran escalation near Hormuz — load up on energy stocks
The U.S. just carried out airstrikes on Iranian military targets near the Strait of Hormuz for the second time this week, pushing oil prices sharply higher. Brent crude is approaching $97 a barrel as traders worry about disruptions to one of the world's most important oil shipping routes.
Idea
The Strait of Hormuz handles roughly one-fifth of all oil shipped worldwide. Repeated U.S. airstrikes with no ceasefire in sight mean the risk of a real supply disruption is growing, not shrinking. Oil stocks like ExxonMobil and Chevron typically rally hard in the first week of this kind of escalation because their profits are directly tied to the price of crude. With inflation already running hot and rate hikes back on the table, energy stocks also offer a hedge — they tend to outperform when prices are rising across the economy.