As oil spikes, energy stocks again lead US markets
The S&P 500’s energy stocks are some of the few bright spots in the blue-chip index Thursday, after continued US and Israeli bombing and renewed Iranian attacks on energy infrastructure throughout the Middle East diminished hopes that the Islamic Republic’s military action to disrupt the flow of oil and gas out of the Gulf would quickly peter out.
The average price per gallon of gasoline in the US shot up $0.27 from last week to $3.25, a 9% increase, according to new data from AAA, as escalating tensions in the Middle East push oil prices higher.
US crude oil climbed by more than 8.5% in afternoon trading, pushing the price of benchmark West Texas Intermediate crude above $81 at points, a level it hasn’t seen since the summer of 2024.
The price spike is hammering energy-sensitive stocks like airlines and consumer staples, and driving outperformance among oil and gas companies. Energy is already the S&P 500's top-performing sector by far in 2026.
US gas drillers such as APA, Devon Energy, and Coterra Energy are seeing sizable gains as Qatar Energy’s ongoing shutdown of liquefied natural gas production has sent global gas prices soaring. Qatar Energy fully shut down gas liquefaction on Wednesday. It is unclear when it will resume liquefaction, but once it does, it will take a month for Qatar’s LNG production to hit peak capacity again.
Coming into this week, there had been some very well-defined and well-subscribed trades:
Memory stocks > everything, especially software.
Rest of the world’s stocks > US stocks.
Within the US market, the many > the few (as in, S&P 500 equal weight over S&P 500).
War is far from kind. In fact, for markets, it is seemingly a catalyst for mean reversion: all of these aforementioned trades are reversing this week. As a result, the war has become a major rotation trade.
The Takeaway
Since gasoline prices will mechanically work as a tax on consumption, it’s unsurprising to see that Thursday’s biggest losers early were consumer staples stocks, with that sector down about 2%. Walmart and Dollar General — whose less affluent customers can be especially sensitive to higher gasoline prices — were leading the charge lower there.