By Laura Sanicola
The global energy state of play 100 days into the worst supply shock in modern history has confounded analysts and investors alike.
On one hand, many of the early calls were right. Shares of top U.S. refiners, such as Marathon Petroleum and Valero Energy, have rallied 25-30% as the Iran war disrupted supplies of gasoline, diesel, and jet fuel even more severely than it did crude oil.
U.S. petrochemical producers, such as LyondellBasell Industries and Dow, initially gained as Middle Eastern outages allowed them to raise prices for the first time in years.
Oil prices that have risen $30 per barrel from prewar levels strengthened cash flow for upstream producers, including Diamondback Energy, even though shale companies resisted immediately increasing production.
Oilfield services stocks, such as Halliburton and SLB, have also climbed higher despite disruptions to their own Middle Eastern operations, though less than they might have if producers had launched a new drilling cycle.
But the bigger surprise has been the price response -- or lack of one.
The effective closure of the Strait of Hormuz has removed more than 10 million barrels a day of Middle Eastern oil from normal trade routes. Yet Brent crude has stabilized around $100 a barrel, far below the $150 to $200 levels some analysts warned were possible early in the war.
Even the physical market looks calmer. The premium for immediate deliveries of physical barrels of Brent crude over later barrels, which reached $36 a barrel during the scramble for supply in early April, has fallen to about $2, according to recent research from JPMorgan. Oil market volatility and some fuel prices have also eased.
One reason is that more oil continued moving through or around Hormuz than some forecasters initially expected during the conflict. Saudi Arabia and the United Arab Emirates increased shipments through pipelines that bypass the strait. U.S. crude and fuel exports rose to records, while governments released hundreds of millions of barrels from emergency reserves. Sanctioned Russian oil is flowing more freely to India, and a limited number of tankers have continued crossing Hormuz despite the risks.
Demand also fell much faster than expected. Goldman Sachs estimates the Iran war cut global oil use by four million to five million barrels a day in April -- or four to five percent of global demand -- while the International Energy Agency now expects second-quarter demand to fall 2.4 million barrels a day from a year earlier.
China was the largest factor. Its crude imports have fallen by roughly four million barrels a day from a year ago, as refiners cut runs and restrictions on fuel exports have reduced the incentive to process more oil. Chinese gasoline and diesel consumption is also down more than 10% from a year ago, according to the IEA.
China could afford to retreat because it had built a large cushion before the war -- though exactly how large is up for interpretation.
The natural gas market also adapted better than feared. Qatari and Emirati liquefied natural gas exports have fallen about 95% from a year ago, but nearly 60% of the missing supply has been replaced by new projects in North America and Africa and higher output elsewhere, according to JPMorgan. That kept international gas prices well below their 2022 peaks.
The energy market, however, is far from out of the woods.
The inventory cushion is shrinking rapidly, even if the world isn't close to running out of oil. U.S. commercial and strategic crude stocks fell by a combined 16 million barrels in the latest week. Inventories at Cushing, Okla., the delivery hub for U.S. crude futures, are approaching levels at which storage and pipeline operations can become more difficult.
Major crude benchmarks also continue to trade at premiums of roughly $2 to $3 a barrel for immediate delivery over later months -- a sign that near-term supply remains tight, despite the calmer headline price.
Fuel markets are tighter still. Gasoline refining margins are around $35 a barrel, while diesel margins are near $60, according to OPIS. (OPIS is owned by Dow Jones, the publisher of Barron's.) Gasoline inventories recently completed their longest stretch of consecutive weekly declines on record.
JPMorgan predicts Hormuz will reopen in June and expects Brent to remain near $100 per barrel for most of the year, with monthly averages slipping below that level only late in 2026. If the strait stays closed, however, each additional month would add roughly $5 a barrel to the bank's third-quarter forecast for oil prices and $15 to its fourth-quarter estimate as inventories decline.
A lot rides on whether Hormuz stays closed for another 100 days.
Exxon Mobil and Chevron can benefit under either scenario better than most of their peers. Their oil production businesses gain if inventories keep falling and crude prices rise, while their refineries, trading desks, chemical plants, and logistics networks can profit from the dislocations created by the war. If Hormuz reopens and oil falls, that diversification should provide more protection than investors would get from a pure upstream producer.
Refiners' near-term earnings are likely to remain strong due to higher fuel margins, but those margins could compress if Hormuz reopens, allowing Middle Eastern refineries to restore output and Asian plants to raise utilization.
Oilfield services companies still need higher oil and gas prices to turn into multiyear spending plans. Petrochemical producers received a reprieve from Middle Eastern outages, but China's excess capacity continues to limit a lasting recovery.
The next 100 days may be less forgiving. The market has already used many of its easiest workarounds, while China's eventual return could collide with lower inventories. The race now is between reopening Hormuz and running down the remaining cushion.
Write to Laura Sanicola at laura.sanicola@barrons.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
June 07, 2026 01:00 ET (05:00 GMT)
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