What Happened?
A number of stocks jumped in the morning session after Energy Sector Climbs as Oil Prices Top $103 on Middle East Supply Disruptions. Crude oil prices surged past $103 per barrel, driven by Middle East conflict and pipeline disruptions in Saudi Arabia. Global crude benchmarks rallied after geopolitical tensions in the Middle East and an outage on Saudi Arabia’s East-West pipeline raised fresh supply concerns, according to Reuters. U.S. crude traded above $103 per barrel, while international benchmark Brent advanced to around $107 as of this writing. Higher crude prices support energy producers’ margins and cash flows by lifting the price received for petroleum output. Even as rising oil prices and climbing Treasury yields created headwinds for the broader equity market, energy stocks advanced as investors rotated into companies positioned to benefit from tighter global oil supply.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks.
Among others, the following stocks were impacted:
- Mixed or Offshore Upstream E&P company SM Energy (NYSE: SM) jumped 3.5%. Is now the time to buy SM Energy? Access our full analysis report here, it’s free.
- U.S. Shale E&P company Crescent Energy (NYSE: CRGY) jumped 3.2%. Is now the time to buy Crescent Energy? Access our full analysis report here, it’s free.
- Mixed or Offshore Upstream E&P company Solaris Energy Infrastructure (NYSE: SEI) jumped 3%. Is now the time to buy Solaris Energy Infrastructure? Access our full analysis report here, it’s free.
- Mixed or Offshore Upstream E&P company Talos Energy (NYSE: TALO) jumped 4.7%. Is now the time to buy Talos Energy? Access our full analysis report here, it’s free.
- U.S. Shale E&P company HighPeak Energy (NASDAQ: HPK) jumped 3.7%. Is now the time to buy HighPeak Energy? Access our full analysis report here, it’s free.
Zooming In On Talos Energy (TALO)
Talos Energy’s shares are very volatile and have had 29 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 26 days ago when the stock gained 5.1% on the news that energy prices soared as President Donald Trump announced broader economic warfare against Iran. Trump stated on social media platform Truth Social that he would launch 'the most crushing economic operation ever taken against any country', describing it as 'economic warfare'. In response, West Texas Intermediate and Brent crude contracts surged. When oil prices rise, energy companies' potential for higher revenues and profits increases, boosting investor confidence and driving up stock prices across the sector. The escalation also dimmed near-term hopes that a U.S.-Iran deal would reopen the Strait of Hormuz, a critical oil choke point.
Talos Energy is up 64.1% since the beginning of the year, and at $18.47 per share, it has set a new 52-week high. Investors who bought $1,000 worth of Talos Energy’s shares 5 years ago would now be looking at an investment worth $1,333.
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