Investors scored on Iran war's oil market boom. Staying long the trade will get trickier
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- ExxonMobil posted quarterly profits of $14.5 billion (doubling year-over-year) while Chevron's net income surged close to 400%, with Chevron CEO Mike Wirth saying the company is 'firing on all cylinders'
- Valero Energy saw quarterly earnings jump over 400% and Chevron's refining segment profits rose 500%, in a market Valero estimates remains 5 million barrels per day short of global refining capacity
- Oil prices have seesawed dramatically since the war began in March — peaking near $120, dropping as low as $72 — and U.S. crude now trades under $85 with Brent around $90, down more than 5% on bets Trump is nearing a deal
- Oil-linked ETFs delivered massive YTD returns — USO up 87%, BNO up 78.1%, DBO up 76%, CRAK up 44.6%, and XLE over 30% — but inflows into the sector actually began after Trump's November 2024 election, before the war started
- CFRA went underweight on energy shortly after the war began, targeting WTI crude in the $60 range, and is instead bullish on natural gas ETFs (citing AI data center demand) and infrastructure funds like AMLP and EMLP
- ETF.com's Dave Nadig called geopolitical oil trades outright gambling: 'If you're making a play on oil because of geopolitics in a six-month period, you are not investing; you are gambling,' adding the moves have been 'literally intraday reactions to things blowing up in the Persian Gulf'
Why it matters: With CFRA targeting $60 WTI versus current prices near $85 — and crude already falling 5%+ on peace speculation — analysts say long-term investors are better off in natural gas and uranium ETFs tied to AI data center demand than chasing war-driven crude, where the same geopolitical catalysts that drove the rally can just as quickly reverse it.
