US energy stocks surge in 2026 even as broader markets remain volatile

US equity markets have remained highly volatile so far in 2026, while energy stocks have rallied sharply as investors bet on a major disruption in global oil supplies.

The S&P 500 has declined about 4 percent so far this year, while the Dow Jones Industrial Average has fallen 3.3 percent. In contrast, the S&P 500 Energy Index has surged 40 percent, significantly outperforming the broader market, reflecting a sharp sectoral divergence.

Energy majors have led the gains. Exxon Mobil has risen about 33 percent so far in 2026, Chevron has advanced 31 percent, and EQT has climbed 44 percent. Shell has gained 30 percent, TotalEnergies has increased 44 percent, and ConocoPhillips has advanced 40 percent.

The rally has been driven by rising crude prices and supply concerns following geopolitical developments. Since the change in leadership in Venezuela earlier this year and the escalation of the Iran conflict in late February, disruptions linked to the Strait of Hormuz and attacks on energy infrastructure in the Middle East have tightened supply. Brent crude prices have surged 100 percent within months, boosting earnings expectations for energy companies.

Energy firms are also expected to benefit from rising demand for natural gas, particularly from data centres supporting artificial intelligence, adding another tailwind for the sector. Higher oil prices are likely to support near-term cash flows for producers and refiners, with companies expected to use the additional earnings for debt reduction or shareholder returns.

Despite ongoing diplomatic discussions between the US and Iran, the conflict shows little sign of easing, with risks of further escalation. Recent warnings from President Donald Trump, including a 48-hour deadline for resolution, have heightened tensions. Reports of attacks on energy infrastructure, including an LNG facility in Qatar, are expected to further constrain supply in the coming years.

The sharp divergence between energy stocks and the broader market underscores a shift in investor positioning toward commodities and defensive sectors amid rising geopolitical uncertainty and supply disruptions.