Oil and gas companies had their best year on record relative to the rest of the stock market. The price of oil rose sharply after President Trump said in a 19-minute speech at the White House that the war against Iran was “nearly over” without giving any timetable for ending the conflict.
Brent crude was trading above $105 a barrel after falling below $100 earlier in the session. West Texas Intermediate (WTI) crude oil futures were trading near $104 a barrel.
Those who own shares in energy companies are probably very happy right now. The energy sector beat all other sectors in the stock market with the biggest advance ever, an analysis by OilPrice.com shows.
Energy: +36.5% growth
Technology: -10% (ie decreased)
Overall S&P 500: -4.6% (down too)
Who makes the most money?
American companies:
Occidental Petroleum: +49.6%
Marathon Petroleum: +43.8%
ConocoPhillips: +35.8%
Exxon: +33.1%
Chevron: +28.5%
European companies:
Equinor (Norway): +69.2% š
Eni (Italy): +43.9%
TotalEnergies (France): +36.5%
Why are stocks up so much?
There are three main reasons:
The war in the Middle East
The conflict has blocked a significant part of the world's oil supply. The Strait of Hormuz – a narrow sea channel through which a huge amount of oil and gas passes – has been virtually closed to normal traffic. That took 7 to 8 million barrels a day off the market ā a huge amount. When there is less oil available, the price automatically rises.
Qatar is the most affected: almost all the natural gas it exports must pass through that strait. Its rapid replacement is practically impossible, which has led to high and unstable gas prices.
The Boom of Artificial Intelligence
Data centers running AI consume huge amounts of electricity ā 24/7. It is estimated that in the US alone, the energy consumption of these centers could increase 30 times by 2035. This means that the need for oil, gas and other energy sources will be much greater in the future.
Stock rotation
Investors have had enough of expensive tech stocks (which have also fallen) and moved their money into energy, which is now considered safer and more profitable.
Will this situation last?
Probably yes, at least for a while, the cited analysis shows, for several reasons:
Oil companies are more decent than before – they don't spend money like crazy anymore, they give back to shareholders and pay their debts. This makes them more stable.
Energy demand is increasing, not decreasing, because of AI. Supplies remain limited as long as the conflict in the Middle East continues.
Green energy and nuclear are also doing well. Tech giants like Microsoft, Google and Amazon buy large amounts of green energy through long-term contracts (sometimes as long as 25 years), which guarantees stable income for renewable companies.
Nuclear power is the surprise star: it provides clean, consistent power 24/7 ā something the sun and wind can't always do. Uranium investment funds are up more than 113% in the past year.
In short: Energy is the king of the moment in the stock market, and the reasons – war, AI and lack of supply – are not going away anytime soon.
