Energy stocks surge as oil hits 4-month high on Trump-Iran tensions
Brent crude reaches $69.42/bbl as President threatens 'massive armada' against Tehran
Energy stocks climbed on Thursday as Brent crude oil surged to its highest level in four months, driven by escalating geopolitical tensions between the United States and Iran that threaten to disrupt global oil supplies.
Brent crude rose to $69.42 per barrel, marking the benchmark's strongest level since September, while West Texas Intermediate crude advanced to $64.27 per barrel. The rally added approximately $3 to $4 per barrel in geopolitical risk premium as investors priced in potential supply disruptions from the Middle East, according to market data.
The catalyst for the price surge came from President Donald Trump, who issued explicit threats on his Truth Social platform warning that a "massive armada" including the USS Abraham Lincoln aircraft carrier strike group was heading toward Iran. Trump stated the fleet was "ready, willing, and able to rapidly fulfill its mission, with speed and violence, if necessary," and referenced previous airstrikes against Iranian nuclear sites from June 2025, warning that any future attack would be "far worse."
Iran rejected negotiations under threat and asserted its readiness to defend itself, further raising the stakes in the confrontation. The heightened rhetoric has revived fears of supply disruptions from the Persian Gulf, which handles roughly one-fifth of global oil shipments.
Exxon Mobil shares traded at $137.58, up 0.5%, with the stock's relative strength index reaching 76, indicating overbought territory. The oil major, which has a market capitalization of $583 billion and a dividend yield of 2.9%, is seen as a direct beneficiary of higher crude prices despite analysts' consensus target of $133.07 suggesting the shares may be approaching fair value.
Analysts at Citi projected that Brent crude could reach $70 to $72 per barrel if tensions escalate further, though the U.S. Energy Information Administration forecasts that Brent will average a more modest $56 per barrel in 2026 due to an expected global supply surplus. The International Energy Agency also revised its global crude surplus estimate for 2026 while simultaneously increasing its demand growth forecast, reflecting the conflicting forces buffeting the market.
The energy sector's rally contrasts with broader market performance, as investors rotate into defensive positions during periods of geopolitical uncertainty. Other major oil producers, including Chevron and TotalEnergies, also advanced in early Thursday trading, though smaller independent producers showed the strongest percentage gains.
Market participants are now focused on whether the Trump administration's rhetoric translates into actual military action or represents a negotiation tactic to pressure Iran into accepting terms for a new nuclear agreement. Any direct conflict could trigger a more sustained spike in oil prices, while a diplomatic resolution could quickly reverse the geopolitical risk premium that has accumulated over the past three trading sessions.