Energy Stocks Surge on Iran
Scorpio Tankers (STNG) and Frontline (FRO) are surging as Iran tensions disrupt shipping routes, with APA Corporation trading at 8x earnings and up 60% year-over-year. Marathon Petroleum (MPC) saw net income up 17% and EPS up 31% in 2025, while Enterprise Products Partners (EPD) offers a 6% yield as a pipeline 'toll collector.' Energy majors like Exxon and Occidental are already up 30%+ this year.
The escalating conflict has nearly halted commercial shipping traffic through the Strait of Hormuz, a critical chokepoint for global energy supplies. This waterway handles about 20% of the world's daily oil consumption and 20% of its liquefied natural gas (LNG) trade. Major shipping lines including MSC and Hapag-Lloyd have suspended vessel transit through the strait, forcing cargo to be rerouted. The alternative journey around Africa's Cape of Good Hope can add 10-14 days to a trip and roughly $1 million in extra fuel costs per vessel. In response to the risk, shippers are levying "conflict surcharges" of $1,500 or more per container on top of already rising fuel costs. The disruption has sent WTI crude futures soaring to $86 per barrel, the largest weekly jump since 2022. The market turmoil directly benefits tanker operators. Scorpio Tankers (STNG) saw its Q4 2025 revenue jump 31.5% year-over-year to $252.7 million, with earnings per share of $2.59 beating consensus estimates by over 55%. Drillers are also showing strong financial discipline amidst the rally. APA Corporation generated over $1 billion in free cash flow in 2025 and is planning a 10% capital expenditure cut for 2026. Refiners like Marathon Petroleum (MPC) entered the crisis on solid footing, having reported a full-year 2025 net income of $4.0 billion, up from $3.4 billion in 2024. The company returned $4.5 billion to shareholders last year, driven by a 94% refinery utilization rate. The surge extends to energy giants beyond the headliners. Occidental Petroleum (OXY) stock is up 32% year-to-date, fueled by a fourth-quarter 2025 earnings report that significantly beat analyst expectations.
