Strait of Hormuz choked off, cheap oil may be gone for good — ride the energy rally with Exxon and Chevron
The Strait of Hormuz — the narrow waterway through which roughly a fifth of the world's oil flows — has effectively been shut down since the Iran war broke out in February. Even with ceasefire talks in progress, analysts say oil prices may never return to their pre-war levels near $60.
Idea
The Strait of Hormuz closure has choked off the world's most important oil shipping route, and even if a US-Iran ceasefire materializes, the structural damage to oil supply chains appears lasting — multiple analysts now say sub-$60 oil is a thing of the past. Oil prices have already surged, and the energy majors that pump and refine crude are riding that wave higher. With China's export prices also climbing at the fastest rate in three years due to the oil shock, global inflationary pressure from energy isn't fading soon. That keeps the tailwind behind big oil stocks like Exxon Mobil and Chevron intact, especially since they tend to outperform when crude stays elevated for extended periods.