Iran Fired on Ships in the Strait of Hormuz. These Energy Stocks Could Surge.

Oil prices are moving higher today after Iran attacked and seized several ships in the Strait of Hormuz. This escalation came less than a day after President Trump announced an indefinite extension of the ceasefire agreement. Iran has yet to reopen the Strait of Hormuz due to the U.S. Navy blockade of Iranian-linked ships.

While President Trump is seeking a diplomatic end to the war, recent hostilities make a resumption of fighting an increasing possibility. If that happens, it could fuel a surge in oil stocks.

Heading higher again

Brent oil, the global benchmark price, jumped more than 3% by Wednesday afternoon to around $102 a barrel. Meanwhile, WTI, the primary U.S. oil price benchmark, was up over 4% to more than $93 a barrel. Crude prices moved higher despite the ceasefire extension after Iran reportedly fired upon three ships in the Strait of Hormuz and escorted two to the Iranian coast. This move comes after the U.S. Navy recently struck and seized an Iranian-linked cargo ship and boarded a sanctioned oil tanker.

Before the war, 20 million barrels of oil per day flowed through the Strait of Hormuz on tankers. That’s now down to a trickle. While Saudi Arabia and the UAE have maxed out the capacity of their bypass pipelines, every day the Strait of Hormuz remains closed, the world loses between 10 million and 15 million barrels of oil. Additionally, 20% of global liquified natural gas (LNG) supplies remain choked off. The longer the Strait remains closed, the greater the long-term damage to the oil market and global economy. Many oil market analysts expect it could take months for ship traffic to return to normal after a peace deal, given the time needed to restart shut-in production, with some capacity unlikely to return to the market for years due to repairs to damaged facilities. As a result, UBS expects Brent crude to remain above $90 a barrel for the rest of the year, even if the two sides sign a peace deal soon.

Oil stocks could have a lot further to run

Oil prices are up more than 50% this year. They could go a lot higher if the war resumes and Iran attacks additional energy infrastructure and closes off another key chokepoint, such as Bab el-Mandeb.

Despite the surge in crude prices, oil stocks have had more modest gains. Shares of oil giants Chevron (CVX +0.16%) and ConocoPhillips (COP +1.95%) are up 22% and 31%, respectively, this year. These and other oil stocks could soar if the conflict with Iran reignites, given their low-cost operations.

Chevron couldn’t have entered 2026 in a better position to capitalize on higher oil prices. The energy giant completed several major growth capital projects last year, positioning it to deliver higher production this year. It also closed its needle-moving acquisition of Hess and is executing a major cost-saving initiative. These catalysts have Chevron on track to generate an additional $12.5 billion in free cash flow this year at $70 oil. With crude oil likely to stay above $90 for the rest of this year, Chevron will produce an even bigger gusher of excess free cash. It will likely return much of this windfall to shareholders by repurchasing shares at the top-end of its $10 billion-$20 billion annual target range.

ConocoPhillips also entered this year in a strong position. It expected to produce an additional $1 billion of free cash flow in 2026 at $70 oil, driven solely by cost-savings initiatives. That number will now be much higher, with crude expected to be above $90. ConocoPhillips will also likely return much of this windfall to shareholders through share repurchases.

Increased risks that oil remains high

The ceasefire with Iran initially sparked optimism that the energy crisis would end with a reopening of the Strait of Hormuz. However, that hasn’t happened as Iran continues to attack ships trying to move through that waterway. With no end in sight, there’s an increased likelihood that the war could reignite and drive oil prices higher. Meanwhile, even if there’s a peace deal, oil prices might not head much lower this year, suggesting that oil stocks could have plenty of fuel to continue their surge.