Geopolitical conflicts often trigger immediate reactions in energy markets. And with conflict ongoing in the Middle East, even as the White House eyes a “takeover” of Cuba, traders are once again asking the same question: Will oil prices surge again — and if they do, who actually benefits?
In last Friday’s Market on Close livestream, Barchart’s Senior Market Strategist John Rowland, CMT, explained how global energy disruptions could impact oil prices, refining margins, and 2 key energy stocks investors should be watching.
The answer may surprise some traders. Because while many focus on the price of crude oil, the real opportunity may lie one step further down the supply chain.
Roughly 20% of the world’s crude oil (CLJ26) supply flows through the Strait of Hormuz, one of the most strategically important shipping lanes on the planet.
Any disruption in that region can ripple quickly through global energy markets, but the impact on the United States may be different than many assume.
Unlike many global economies, the United States imports most of its crude oil from North American sources.
The largest suppliers include:
That means U.S. refiners are less dependent on Middle Eastern crude than many Asian or European markets. And that difference creates an interesting dynamic.
While global oil prices may spike due to geopolitical tensions, U.S. refiners may still access cheaper crude from regional sources.
John pointed out that energy investors should pay attention not just to oil prices, but to refining margins.
Refining margins represent the difference between:
And those margins have been rising sharply.
Why? Because global supply disruptions often affect refined fuels even more than raw crude.
That environment can create strong profitability for refiners.
According to John, two U.S. companies are particularly well positioned in this environment – and they’re a pair of energy stocks that he flagged to viewers earlier this year.
