Energy stocks are expected to rebound Monday as crude oil prices recover from Friday’s 11.45% crash following Iran’s re-closure of the Strait of Hormuz Saturday.
Friday saw broad selling in the energy sector as oil plunged on the initial Hormuz reopening news. ExxonMobil fell 5%, Chevron 4%, ConocoPhillips 6%, and Permian pure-plays Diamondback (FANG) and Devon Energy (DVN) each down 7-8%.
Monday’s rebound will depend on the magnitude of the crude rally. With Hormuz re-closed and Trump threatening to resume bombing, risk premium is returning. Integrated majors with downstream diversification may outperform pure-play E&Ps.
LNG names Cheniere (LNG) are likely to lead higher given renewed Qatari LNG disruption. Oilfield services stocks (SLB, HAL, BKR) typically move 1.5-2x crude moves on leverage to upstream activity levels.