The energy sector earns 201 billion dollars in a month of war

Since the start of the war in the Middle East, a month ago, the value of the 10 largest energy companies in the United States listed on the stock exchanges shot up by around $201.571 billion, equivalent to what the Pentagon additionally requested to finance military operations related to Iran.

At the close of business on February 27 – the day of the outbreak of the war between the United States, Israel and Iran – these companies had a combined market value of one trillion 686 thousand 523 million 186 thousand dollars, and at the end of the session on the 27th it stood at one trillion 888 thousand 94 million 51 thousand dollars, an increase of 12 percent.

The largest energy companies in North America, ranked by market capitalization as of last Friday’s close, include Exxon Mobil (XOM), with a market capitalization of $712.515 billion; Chevron (CVX), 421.3 billion; ConocoPhillips (COP), 163 thousand 503 million; Marathon Petroleum (MPC), 74 thousand 187 million; Sib NV (SLB), 80,303 million and Valero Energy (VLO), 76 billion dollars, among others.

The Strait of Hormuz (the world’s most important transit route for crude oil and the vital point for 20 percent of the world’s oil distribution and fundamental to the end of the war) has been closed for a month, under the threat from Iran that it would set fire to ships attempting the route.

The above generates fear of interruptions in production, which increases the price of hydrocarbon and, therefore, the value of the companies that produce it.

A long, strong rise in oil can affect inflation and interest rates down the road.

Brett Arends, a specialist in markets, economics and finance, with experience as an analyst and consultant, maintains that the international price of oil will hardly rise much more, but predicts it will remain high in the long term.

Profitability

As a result of the war in the Middle East (United States, Israel and Iran) and the fear that the conflict will take longer than expected, Brent oil closed on Friday at $113.83 per barrel, which represented an advance of 56.25 percent in one month of the war. WTI rose 49.75 percent, to exceed $100.17. Natural gas in Europe soared to $69.52, from €54.18 a month ago.

The stock markets and the price of oil were subjected last Monday (March 23) to a roller coaster that caused strong fluctuations during the day and that had a common trigger: the decision of Donald Trump, president of the United States, to postpone the attack on Iran’s energy facilities.

Only the Exchange Traded Fund (ETF), a security referenced in this case in energy companies, the Vanguard Energy (VDE) registers a gain of 10.63 percent in a month of conflagration in the Middle East. Which shows that it is one of the sectors that is currently earning dividends in the stock market.

Profitability in consumption is discretionary; For example, the XLY ETF falls 8.25 percent. The consumer staples ETF XLP fell 7.94 percent. For its part, the financial sector, ETF XLF, lost 6.93 percent in one month.

Meanwhile, a new aspect of the conflict has emerged this weekend, following the actions of the Yemeni Houthis, who have launched a missile against Israel and which, predictably, will further strain the oil and gas market. The date marked in red for the market is April 6, when the period given by Trump not to attack the energy infrastructure in Iran expires.