By Avi Salzman

Oil prices have soared 37% since the start of the Iran war through Monday's close. But big oil stocks have barely moved higher at all. The five oil "majors" -- Exxon Mobil, Chevron, TotalEnergies, BP and Shell -- are up an average of just 1.4% since the war began. That performance jars with the common belief that the stocks of the best-known oil companies rise when oil itself rises.

But the Iran war has upended a number of assumptions, including how the stock market might react to an unprecedented series of events in energy markets.

There are a few reasons why the oil majors aren't getting much of a lift. One is that the companies themselves are vulnerable to severe disruptions from the war, even if they aren't based in the Middle East. Exxon Mobil has a partnership with QatarEnergy in liquefied natural gas, or LNG. Qatar's LNG currently can't reach customers because ships can't get out of the Persian Gulf -- continued disruptions will also threaten the company's expansion plans.

BP produces oil in Iraq, and military drones have reportedly hit one of its oil fields, prompting evacuations. Chevron was forced to temporarily suspend operations at a gas field off Israel's coast, at Israel's request. None of those companies responded to requests for comment on the extent of the disruptions to their operations.

TD Cowen estimates that TotalEnergies has the most exposure to the Middle East as a percentage of its production, at 27%. It's followed by BP at 18%, Exxon at 16%, Shell at 13% and Chevron at 4%.

Another reason that the stocks haven't moved much is that they had already been rising before the war began. As with other dramatic events, investors often bid prices up before events happen. "I think people were buying the rumor, selling the fact," said Neal Dingmann, an analyst at William Blair. Most investors are wary of buying more shares now, because a sudden end to the war could cause prices to fall back. "The fact -- whether right or wrong -- is people think this is not going to be too extensive," he said.

Few oil shocks in recent memory have lasted for more than a few months. Buying the big oil stocks now means that investors need to believe that the Iran war is different.

"It's difficult to chase [the gains] unless you have strong conviction that the Middle East conflict is going to sustain for six-plus months, then everything's really cheap," says Dan Pickering, chief investment officer of Pickering Energy Partners.

Oil prices are set in futures markets that allow traders to buy contracts expiring in different months. The front-month contract -- the one expiring soonest -- tends to draw the most attention and news headlines, because it says the most about the current state of the oil market. But equity investors are more attuned to contracts expiring well into the future, for signs about where oil could go from here. They want to know they can count on consistent cash flows in the future. And since the war began, contracts expiring in six months to a year haven't moved much.

The March 2027 Brent crude contract is up about $4 since the war began. Futures contracts expiring late in 2027 are trading below $70. "In a period of another 12 -18 months the market's saying this could be sorted out and oil prices could be moving lower," said Ben Cook, a portfolio manager at Hennessy Funds.

Pickering also notes that the oil majors often trade more in line with the broader market than smaller energy stocks do. As broad-market exchange-traded funds fall, that can also impact the big energy names. Unlike smaller producers, they have an array of business lines, from refining to making chemicals to marketing gasoline. Some of those businesses rise and fall along with the health of consumers. And the war's inflationary impacts aren't good for consumers.

All that said, Pickering thinks there is a way that the current conflict could end up elevating oil prices for longer. Countries throughout the world are waking up to the fact that their oil supplies may not be secure. And they're almost certainly going to start stockpiling more as soon as the oil market calms down.

"It's going to add some strategic demand that will help tighten the market," Pickering said. "So whatever your price expectation was for 2027, I think you have to be a little bit more bullish right now."

Write to Avi Salzman at avi.salzman@barrons.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

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March 10, 2026 01:00 ET (05:00 GMT)

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