Oil Above $100, Then the Pullback - Hormuz Watch

Energy-sector review for the week ended July 24, 2026. Data through the U.S. close.

The bottom line

Oil crossed $100, fell back below it, and still left a clear mark on the equity market.

Brent crude settled at $100.69 Thursday after attacks on tankers and disruption near critical Middle Eastern shipping routes intensified supply concerns. It then fell 3.9% to $96.78 Friday as traders took profits and a new diplomatic effort offered the possibility of lower near-term risk.

Energy stocks nevertheless finished the week ahead. The Energy Select Sector SPDR Fund gained about 3.4%; Exxon Mobil rose 6.5% and Chevron advanced 4.0%. Valero Energy fell 2.3%, illustrating why a refiner should not be treated like an oil producer.

However, all eyes are on Hormuz

The week in three stocks

From the July 17 close through July 24:

• Exxon Mobil: $147.36 to $156.94, up 6.5%.
• Chevron: $187.38 to $194.79, up 4.0%.
• Valero Energy: $309.65 to $302.50, down 2.3%.

Exxon and Chevron participated directly in the crude-price rally. Both own upstream operations whose earnings generally improve when realized oil and gas prices rise, though production volumes, regional pricing, taxes, and hedging can change the precise effect.

Valero’s economics are different. A refiner buys crude oil and sells gasoline, diesel, jet fuel, and other products. Its core variable is the margin between the cost of inputs and the value of outputs—not the crude price in isolation.

Exxon and Chevron: higher prices, with operational caveats

Exxon had already indicated that its second-quarter profit could improve by roughly $5 billion from the first quarter because of higher oil prices and better refining margins. That preview gave investors a more direct financial bridge between the commodity move and company earnings.

Chevron also moved higher ahead of its July 31 results. For both companies, the near-term earnings case is supported by higher realized prices, but the companies remain integrated businesses. Refining, chemicals, liquefied natural gas, production growth, maintenance, and capital allocation can either reinforce or offset the benefit from crude.

Friday’s oil decline did not reverse the weekly gains in either stock. That may indicate investors were pricing more than Thursday’s settlement: a tighter physical market, the possibility of continued shipping disruption, and stronger second-quarter earnings.

It also creates a risk. If diplomatic progress restores flows more quickly than expected, the risk premium in crude could contract faster than company fundamentals change.

Valero: why refiners can move differently-and profits

Valero’s weekly decline is not evidence that higher energy prices are automatically bad for refiners. It is evidence that the relationship is conditional. Also profit taking should be considered given Valero rising to all-time highs just recently.

Refining profitability depends on “crack spreads”—the difference between product prices and crude costs—along with refinery utilization, outages, regional supply, environmental credits, freight, and product demand. A sudden crude increase can pressure a refiner if gasoline and distillate prices do not rise as quickly. The opposite can occur when product markets tighten more than crude markets.

Valero rose early in the week, reaching a $314.80 close Tuesday, then declined through Friday. The stock’s path suggests the market became less confident that the crude rally would translate cleanly into expanding refining economics.

The correct comparison is therefore not Exxon versus Valero as two versions of the same oil bet. It is an upstream and integrated earnings exposure versus a conversion-margin business.

The second-order effect on the broader market

Oil’s influence extended well beyond energy shares.

Higher crude can raise gasoline and diesel prices, increase freight and manufacturing costs, and reduce the money consumers have available for other purchases. If that pressure persists, inflation expectations can rise and the Federal Reserve may have less room to reduce interest rates. Higher bond yields then weigh most heavily on assets whose value depends on profits far in the future.

That transmission mechanism helps explain why Thursday’s market selloff combined strength in energy stocks with weakness in long-duration technology shares. The same barrel of oil that supports producer cash flow can increase the discount rate applied to a growth company.

What is actually priced in?

The current setup contains two competing assumptions.

The bullish energy view is that physical supply risk remains underappreciated: tanker attacks, restricted shipping routes, depleted inventories, and geopolitical escalation keep crude and refining margins above prior expectations.

The counterargument is that much of the risk premium is political rather than structural. A credible diplomatic agreement, rerouted cargoes, new supply, or demand destruction could bring prices down quickly. Friday’s nearly 4% decline showed how rapidly the market can remove part of that premium.

Company-specific execution then determines who retains the benefit. A producer must deliver volumes and control spending. A refiner must convert volatility into attractive product margins and high utilization. Neither outcome follows automatically from a headline price.

What to monitor

For the next phase, the most useful indicators are:

• All eyes on Hormuz
• Brent and West Texas Intermediate curves, not only the front-month price.
• Tanker traffic and insurance costs through affected routes.
• U.S. and global petroleum inventories.
• Gasoline, diesel, and jet-fuel crack spreads.
• Refinery utilization and unplanned outages.
• Exxon and Chevron’s realized prices, production, and capital-return plans.
• Valero’s throughput, operating costs, and refining margin per barrel.

The week strengthened the earnings backdrop for integrated producers but also demonstrated that “energy” is not one trade. Where a company sits in the value chain matters as much as the direction of crude.

Sources and data: Reuters on Brent’s move above $100; Reuters on oil’s July 24 pullback; Reuters on Exxon’s second-quarter earnings signal; closing prices from Nasdaq historical data.

Author positions: As of publication, the author holds long positions in CVX, VLO, and XOM. Positions may change after publication without notice.

Compensation: Neither Aria Vantage nor the author received compensation from any issuer or other third party in connection with this article.

Important: This is personal investment research for general informational and educational purposes. It is not individualized investment advice or a recommendation to buy, sell, or hold any security. Read the full Disclosures.