Something in the market’s math doesn’t hold.
The IEA’s director general Fatih Birol has described the current situation at the Strait of Hormuz as the worst energy crisis in history. Oil – which is trading above $90 a barrel – is still 38% above where it traded the day before the conflict began.
At $4.09 per gallon nationally, and $5.86 in California, the pump is not signaling resolution.
Yet seven major energy producers and refiners — the companies that drill the oil, refine the gasoline, and collect the margin — are trading as if Hormuz is already open, the crisis is resolved, and crude is heading back to $65.
Their forward price-to-earnings multiples sit between 7x and 11x, roughly half the S&P 500’s consensus forward P/E of around 22x.
The disconnect is not subtle. It is structural.
The Energy Stocks That Didn’t Get The Memo
The State Street Energy Select Sector SPDR ETF (NYSE:XLE) is up 27% year-to-date, which sounds impressive until you consider that crude oil is up 38% from pre-war levels.
The sector has underperformed its own commodity — and pulled back 10% from its March peak — even as the underlying supply disruption has not materially improved.
That compression is where the opportunity, and the risk, lives.
The April drawdown is the mechanism that created this entry point.
Every name in the table has sold off between 5% and 14% month-to-date, even as WTI has held around $90 and Brent has pushed toward $95.
This post was originally published here
