S&P 500 Energy Sector Shows Best Performance Amid Rising Commodity Prices
Oil and gas stocks gain more than 1.5% thanks to rising Brent and WTI futures. Investors are pricing in a persistent supply deficit amid OPEC+'s weak response to demand growth.
I have been trading energy derivatives since 2009. And over this time, I've learned: when beginners see "energy sector leads," they buy. Pros take profits. Today's 1.5% rise in oil and gas stocks amid OPEC+'s weak response is the last dance of the geopolitical premium. And I'm almost sure the music will soon stop.
Moreover, looking at volume data: the TradFi sector accounted for 34% of all trading volume on June 14, with funding rates for CL and BRENTOIL being negative. This means that long positions are paying shorts. The market is overbought. Institutions are hedging, while retail buys at the peak. Let's figure out where the hook is.
[The Gist]: What's Really Happening
The real driver of oil price growth and, consequently, stocks is not a "fundamental deficit" but the closure of the Strait of Hormuz due to the conflict with Iran. Since the beginning of 2026, Brent prices have stayed above $100 per barrel precisely because of this. OPEC+ formally raised quotas by 188 thousand barrels per day starting in July, but "it means nothing as long as the Strait of Hormuz is closed," as Rystad Energy analyst Jorge Leon directly stated. The market needs not paper quotas but physical barrels that can reach the buyer.
OPEC+'s decision is a political signal, not a real increase in supply. Market participants understand this: that's why futures continue to rise. But this rally is 100% driven by fear. As soon as news of a truce emerges (and Trump stated that a deal with Iran could be reached as early as this weekend), oil falls 15-16% in a day, as happened on April 8. Energy stocks follow with a 1.5x multiplier.
Insight the news won't tell you: The energy sector's (XLE) 28% gain since the start of the year is not organic profit growth. It's the inflation of a "war premium" (geopolitical war premium). I look at Chevron (CVX) reports: free cash flow for Q1 2026 was negative — minus $1.55 billion. And net profit for 2025 fell by 30.4%. The market turned a blind eye because the stock price rose along with oil. This is called an earnings trap. When oil prices fall, stocks will crash faster than you can say "sell."
Timeline and Context
Let's overlay geopolitics on the numbers. I'll compile a timeline showing the fragility of the current rally.
| Date | Event | Oil Reaction (Brent) | Energy Sector Reaction (XLE) |
|---|---|---|---|
| April 2026 | US imposes naval blockade on Iran; Iran closes Strait of Hormuz | Surge above $100 (was $55 per BNEF forecast) | XLE begins rally (+28% YTD) |
| April 8, 2026 | Trump announces ceasefire | 15% drop in one day | XLE falls synchronously, losing weekly gain |
| June 7, 2026 | OPEC+ raises quotas by 188k b/d (symbolic) | Consolidation around $89 (Brent) | Calm before the next move |
| June 11, 2026 | Trump again states: deal with Iran possible this weekend | Oil trades around $89, awaiting news | Brief selling pressure |
| June 13-14 (now) | Investors price in deficit amid OPEC+ inaction; energy stocks rise | Futures back in positive territory | XLE shows best performance in S&P 500 (+1.5% for the day) |
Key point: it's June 14, and the market is trading rumors that the Strait of Hormuz will remain closed. But just last Friday, June 11, there was news of a possible deal. If within the next 72 hours Iran or the US makes a counter-statement, the whole structure collapses.
Who Wins and Who Loses
Below is not just sectors. It's a battlefield of two opposing bets on the same asset — oil.
| Group | Specific Assets | Dynamics / Fundamentals | Hidden Risk | Verdict |
|---|---|---|---|---|
| Winners (Short-term) | XLE, XOM, CVX, COP, SLB | Up 1.5%+ for the day; XLE +28% YTD | P/E of XOM (~14.9x) and CVX (~14.0x) are inflated | Hold, but prepare stop-loss |
| Winners (Speculators) | Brent and WTI futures (short positions) | Funding rates negative — shorts profit from decline | Risk of sudden rise if conflict escalates | Actively hedging |
| Outsiders (Risk zone) | Coterra Energy (CTRA) | Down 8.6% in a day to $32.56 | Break of moving averages; testing support at $30.93 | Technical "dead" |
| Outsiders (Indirectly) | Airlines (DAL, UAL), Consumer sector | With oil >$80, their margins shrink | But on peace news, they jump 5-10% | Do not hold short |
| Hidden Beneficiaries | Gold (XAU/USD), Swiss franc (CHF) | Rise when stock market falls | Hedge against energy bubble reversal | Add to portfolio |
Main takeaway: The current energy sector growth is a classic Dead Cat Bounce on deficit expectations. But real earnings of Chevron and Exxon are falling. Meanwhile, Coterra Energy (CTRA) has already crashed 8.6% — a bearish trend within a "bullish" sector. That's the first warning sign.
What the Media Isn't Telling You
Propaganda headlines scream about a deficit. I see three layers of reality they hide.
First insight: The Strait of Hormuz is a nuclear button for prices. As long as it's closed, oil prices stay afloat. But Rystad Energy analysts warn: as soon as the strait opens, "the market could very quickly shift from fear of deficit to fear of oversupply." The return of full OPEC+ volumes, increased US shale production, and weakening demand due to high prices will lead to a massive glut. This is a scenario for Brent to crash to $70-75.
Second insight: Speculators are playing against you. Negative funding rates on oil futures mean smart money (short sellers) are paying to hold positions, expecting a decline. They are confident the current price level is unsustainable. Long positions (which push prices up) subsidize shorts by paying them interest. This is a classic sign of an overheated market before a reversal.
Third insight (valuation). Exxon and Chevron trade at a forward P/E of about 15x. For oil companies, that's expensive. Even at the current price of $89 per barrel, their free cash flow is negative. If oil falls to $70, their EPS will collapse, and the multiple will inflate to 20x+. Stocks will fall 30-40% faster than oil itself. Because the market revalues discounted future earnings that won't materialize.
Forecast: Next 30 Days and 90 Days
Next 30 days (to mid-July): I expect the key date to be mid-next week — the Fed meeting (June 17) and potential Iran news. If no deal, oil could test $95. But I bet that behind closed doors, intensive negotiations are underway. I estimate a 40% probability of a peace agreement within the next 14 days. On any positive news from Geneva or Vienna, Brent will crash to $75-80 within 48 hours. XLE will fall 6-8% synchronously. Coterra Energy (CTRA) with its current technical breakdown [$32.56, resistance $34.19] could drop to $29.50.
Next 90 days (to September 2026): Base case: The Strait of Hormuz partially or fully opens by August. The world returns to oversupply. Oil falls to the $65-75 range. XLE corrects 15-20% from current highs. The hidden beneficiary — airlines (DAL, UAL). With oil at $70, their operating margins recover by 300-400 basis points. I am already opening a small long position in airlines with a protective stop in case of escalation. And I am exiting XOM and CVX before it's too late.
Editorial Forecast
Asset: Energy sector ETF (XLE) — short position.
Direction: Down within 24-72 hours. Market is overbought and waiting for a trigger.
Key levels: Current XLE price ~ $99.80. Downside target — $95.00 (first support) and $92.00 on strong peace news. Stop-loss — above $102.50.
Confidence level: Medium (60%), amplified by the geopolitical component.
Main risk: If talks with Iran break down completely and further tanker strikes follow, Brent breaks $110. XLE flies to $108, knocking out all short positions. I hold a protective call option on XLE for just such a black swan.
The editorial opinion is based on probabilistic analysis and is not an investment recommendation.
— Editorial Team
