The energy sector experienced a surge this week as shares of U.S. energy giants climbed to their highest levels in two years. This upward trend was fueled by rising tensions between Iran and Israel, sparking concerns about potential oil supply disruptions. The Energy Select Sector SPDR Fund (XLE), which tracks the performance of 31 major U.S. energy companies, including giants like Exxon Mobil and Chevron, recorded a remarkable 6.4% gain this week. Investor confidence poured nearly $300 million into the XLE ETF, marking the highest inflow since late July. This surge in investments reflects a growing sense of optimism in the sector.
Exxon Mobil, the largest U.S. oil company, reached a record high of $125 per share on Friday. The stock extended its winning streak for a sixth consecutive day, closing the week with a 7% gain, marking its best performance since October 2022. This positive sentiment reverberated throughout the market as oil prices also climbed, with West Texas Intermediate (WTI) crude recording its fourth consecutive day of gains, reaching levels last seen in late August.
The escalating geopolitical tensions between Israel and Iran have ignited fears of global oil supply disruptions. After Iran launched over 180 ballistic missiles on Tuesday, Israel vowed a forceful retaliation. While Israeli air defense systems successfully intercepted most of the missiles, the attack further escalated tensions in the already volatile region. President Joe Biden addressed the escalating crisis on Friday, emphasizing Israel’s right to defend itself but also urging restraint in retaliatory measures. He suggested alternatives to targeting oil fields, recognizing the potential for a further escalation of the conflict.
Amidst the escalating tensions, Iran’s Supreme Leader Ayatollah Ali Khamenei defended the missile strike as a “legitimate punishment” for alleged Israeli crimes. He called for greater resistance against Israel in the region. Iran’s deputy commander of the Islamic Revolutionary Guard Corps further added to the tensions, issuing a stern warning that Iran could target Israeli oil refineries and gas fields if Israel retaliates with a strike on Iranian territory.
The top 10 performing U.S. energy stocks this week highlighted the overall positive sentiment in the sector. These companies experienced significant price increases, reflecting investor confidence in the face of rising oil prices and the potential for increased demand:
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Diamondback Energy, Inc.
(FANG) – 13.62% price change*
APA Corporation
(APA) – 9.36% price change*
The Williams Companies, Inc.
(WMB) – 9.04% price change*
Marathon Oil Corporation
(MRO) – 8.44% price change*
Occidental Petroleum Corporation
(OXY) – 8.35% price change*
Halliburton Company
(HAL) – 8.25% price change*
ConocoPhillips
(COP) – 8.19% price change*
EOG Resources, Inc.
(EOG) – 8.05% price change*
Devon Energy Corporation
(DVN) – 7.94% price change*
Kinder Morgan, Inc.
(KMI) – 7.82% price changeThe performance of these energy companies underscores the potential for growth in the sector amid geopolitical instability and rising oil prices. However, investors should remain vigilant and monitor the evolving situation in the Middle East closely as it could significantly impact future market trends.
