By Laura Sanicola

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It's tough to say where oil prices go next as the war with Iran enters its second week. Beyond the volatility, the key for energy investors is where prices settle after the fighting winds down.

For now, many analysts see oil continuing to rally after a nearly 35% gain over the last week took crude prices over $90. On Monday, the price of a barrel of Brent crude topped $100.

The knock-on effects of Iran effectively closing of the Strait of Hormuz are just as painful as the closure itself. Producers like Kuwait and Iraq are curbing production because of a lack of storage. Some Middle East refineries are down due to lack of oil or transport options.

The next moves will depend on how soon the war ends and much damage is done to Middle East energy infrastructure.

Investors, meanwhile, face a classic commodity paradox. A short disruption to Middle East oil and gas is bullish for prices, but if the war goes on for much longer, it will damage the global economy and energy demand. The market could quickly get back to the oversupply situation before the war, sending prices lower.

Energy Insider's view is that the situation is likely to remain bullish for U.S. energy producers, refiners, and petrochemical companies.

Here are some takeaways.

1. Oil May Stay Hotter for Longer

Near-term prices could keep rising as countries like Kuwait and Iraq curtail production due to a lack of storage and transport. According to Macquarie analysts, a few weeks of Hormuz closure "will create a domino effect of events that could push crude to $150 or higher."

Goldman Sachs had forecast Brent declining to an average $66 in the fourth quarter as the geopolitical "risk premium" fades. But the bank now says it's revisiting its estimates, seeing $100 within reach over the next week.

Prices may not come down as quickly as past disruptions because of the unprecedented amount of oil that's not moving, Goldman said in a note Friday. The supply shock today is about 17 million barrels/day, 17 times larger than the peak April 2022 hit to Russia production, Goldman points out. Rerouting through pipelines is limited, and inventories are quickly being drawn down.

Much hinges on whether there's damage to energy infrastructure and how much additional output OPEC+ members can produce (and ship) to make up for shortfalls.

Even if one major hub is damaged, it can have widespread impact. The 2019 attack on Saudi Arabia's Abqaiq processing facility, for instance, briefly knocked roughly 7 million barrels per day offline, notes Bob McNally, president of consultancy Rapidan Energy Group.

"If it's just Hormuz and the conflict ends, shipping starts up again. Long--term damage to fixed infrastructure is another thing. It's very bearish," McNally says.

Takeaway: Prices are likely to fall on signs of the conflict easing, but a higher geopolitical risk premium and damage to key infrastructure could keep prices higher than before the war.

2. U.S. Shale Is Back in Business

U.S. oil producers were generating strong free cash flow at $65-$70 oil while trading at relatively modest multiples. Things are looking better now as analysts see oil prices staying higher for longer.

Small- and mid-cap E&Ps look particularly attractive. The smaller E&Ps are up just 3% since the war started, while the 12-month "strip" for oil -- an average of 12 front-month futures contracts -- is up 6%. The stock reaction implies the market is skeptical those higher prices will last.

That's opened an attractive opportunity in smaller producers, notes Pickering Energy Partners. Those producers now have a median free-cash-flow yield of 10%, and 31% upside to net asset value assuming long-term oil prices around $70 per barrel. Even with the stocks rising lately, the market isn't fully pricing the possibility of sustained oil prices in the $70s for the rest of the year.

Expect earnings estimates to rise since companies issued conservative forecasts heading into the year, according to Pickering.

War aside, global oil demand continues to rise. Electric vehicle adoption is progressing more slowly than expected. Long-term forecasts increasingly show oil consumption growing for decades.

McNally believes the shifts have created a "once-in-a-generation" opportunity in oil equities. "The unraveling of the peak demand narrative is the biggest structural change in energy investing in years, " he says.

The takeaway: Capital-disciplined, efficient producers are in a good spot. Diamondback Energy, Matador Resources, APA, and SM Energy look cheap, according to Pickering.

3. Crack Spreads Will Fall, But Refiners Have Other Tailwinds

U.S. refiners are in a sweet spot that's likely to outlast the war.

High international gas prices are hurting European competitors. A restriction of product sales from India and China means less products in the global marketplace, while demand remains the same. Middle Eastern and Asian refineries are curtailing production, due to infrastructure threats or because they can't obtain enough crude as a feedstock. Jet fuel prices are skyrocketing across the globe, as it's not easily stored.

None of this has been lost on the equities market. Marathon Petroleum, Valero Energy, and Phillips 66 have rallied sharply, hitting 52-week highs. PBF Energy and Par Pacific Holdings, which serve West Coast markets with fewer competing supply alternatives, have moved even more.

Refining margins will come down once supplies begin moving again through the Gulf. But the industry has spent years closing or converting capacity on the assumption that gasoline and diesel demand was in terminal decline. That structural tightening isn't going away.

Takeaway: Expect the refiner stocks to sell-off once crack spreads return closer to normal. We would then be buyers. Energy Insider views Valero and Marathon as best-positioned.

4. American LNG Is In a Better Spot

American LNG producers like Venture Global and Cheniere Energy have surged since the war started. The gains reflect a rapid repricing in international gas benchmarks; Qatar, which accounts for 20% of global LNG output, has effectively been shut down, and other cargoes are constrained in the Gulf. In Europe, the Dutch TTF benchmark has surged 62% as buyers scrambled to replace Qatari cargoes.

U.S. LNG exporters benefit directly from higher global gas prices, none more than Venture Global, which doesn't have all its output fully contracted. Wider spreads between U.S. gas and international benchmarks improve the economics of liquefaction and increase the value of export capacity.

A higher geopolitical risk premium is likely to be embedded into the international price. That should prop up international prices above a baseline before the war.

The disruption also highlights a significant benefit of buying American LNG: geographic isolation. Gas sold from the U.S. Gulf Coast can travel through multiple channels to reach end users. LNG infrastructure on the mainland U.S. isn't nearly as risky as production in the Middle East.

Takeaway: Venture Global and other LNG producers geared to the spot market are the big near-term winners. Longer-term, we think Cheniere is a safer bet.

5. U.S. Petrochemicals Look Like a War Winner

After years of excess capacity plaguing producers, the war is tightening the supply of petrochemicals and pushing up costs for a core feedstock: natural gas. This setup is great for companies with access to cheap U.S. gas, and worse for those with European exposure.

Several Middle Eastern petrochemical facilities have been disrupted or shut down. OPIS estimates that 12%-13% of global polyethylene supply may be temporarily offline.

KeyBanc recently upgraded Dow, arguing the conflict could boost chemical margins as higher oil prices raise costs for many competing producers. BMO upgraded Westlake Corporation and LyondellBasell Industries, citing tightening polyethylene supply.

Once Middle Eastern facilities return to operation the supply shock will likely fade and prices will come down. But American chemical companies should continue to get a margin boost from low-cost natural gas prices, giving them a cost advantage over naphtha-based producers in Europe and Asia.

Takeaway: Dow and LyondellBasell, the two global giants, are already up 40% and 51% this year. More big gains are unlikely but both have cut their dividends and now have revenue and margin tailwinds. We expect the stocks to stay strong.

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Write to Laura Sanicola at laura.sanicola@barrons.com

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March 09, 2026 12:00 ET (16:00 GMT)

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