Halliburton, Valero and 3 More Stocks Set Up for a Fragile Hormuz Truce

Frontline's record profits came from the Strait's closure, not its reopening, making it the riskiest “peace trade” on this list as tanker rates start to soften. ExxonMobil and Halliburton both took direct financial hits from the war, but their core operations are positioned to recover once Gulf drilling and LNG output normalize. Brent crude has fallen more than 20% in a month as the Strait of Hormuz reopens, even as drone strikes and tit-for-tat attacks keep flaring near the waterway. Brent crude has fallen more than 20% in the past month, sliding from triple digits during the worst of the Iran war to around $72 a barrel today. WTI sits near $70. That kind of move usually means one thing: the crisis is over. It isn't, not quite. The Strait of Hormuz, the chokepoint that carries roughly a fifth of the world's seaborne oil, spent nearly four months effectively shut after the U.S. and Israel struck Iran on Feb. 28. Iran mined the strait, fired on tankers and closed the lane to anyone it considered hostile. The U.S. and Iran signed an interim memorandum of understanding on June 17 meant to reopen Hormuz to toll-free traffic and wind the war down over a 60-day window. It hasn't gone smoothly. Iran briefly reclosed the strait in April over what it called ceasefire violations. As recently as June 25 through 28, Iran and the U.S. traded a fresh round of strikes: drones hit a container ship, the U.S. retaliated, and Tehran hit a vessel carrying Qatari oil before both sides agreed to pause ahead of new talks in Doha. Shipping is still moving under a daily quota system run by Iran's Revolutionary Guard navy, hundreds of vessels remain stranded in the Gulf, and war-risk insurance premiums are still many times above pre-war levels. Set OilPrice.com as a preferred source in Google here Call it half-open. Saudi Arabia has started loading tankers again at Ras Tanura, and the UAE, Kuwait and Qatar are all pushing more crude onto the water, with Gulf flows reportedly climbing back to roughly 75% of prewar levels. That's enough to crater oil prices and scramble the math for nearly every energy stock with Middle East exposure, even as the underlying conflict simmers. That combination, falling prices, a still-fragile peace, and a region racing to restore lost output, creates an odd set of winners. Some obvious oil and gas names are nursing real wounds from the war while betting on a clean recovery. Others made their money from the chaos itself and now have to prove they can hold onto it once the chaos fades. Here are five stocks caught in that transition. 1. ExxonMobil (NYSE: XOM) Two of ExxonMobil's Qatari LNG trains, tied to its stake in the North Field, took damage during the fighting in the first quarter, the kind of detail that doesn't show up on a stock chart so much as in the footnotes of an earnings call. CEO Darren Woods says that lost capacity, about 3% of last year's upstream production, could take up to five years to fully repair. It's a big part of why Exxon's net income fell to $4.2 billion in the first quarter, the lowest in five years, with $706 million in hedge losses tied directly to the war and another $3.9 billion in derivative timing effects layered on top. None of that stopped Exxon from beating estimates on an adjusted basis: $1.16 a share against a Street consensus near $1.01, a beat of more than 15%. The reason is simple. Most of Exxon's growth engine never touched Hormuz to begin with. Permian output is tracking toward 1.8 million barrels of oil equivalent this year, and Guyana just posted a record above 900,000 gross barrels a day. Add a planned $20 billion in 2026 buybacks, a dividend bumped to $1.03 a share, and a Bank of America upgrade to buy on June 15, and you get a stock that's clawed back ground even with an open wound in Qatar. Shares sit around $137, still well off the $176.41 high hit in March before the war's costs were fully priced in. There's also a political wrinkle that has nothing to do with Hormuz: Trump has accused Exxon of gouging consumers at the pump and ordered a Justice Department inquiry. Call this one a slow-recovery trade rather than a peace trade. The company is healing on a timeline measured in years, not on a calendar tied to whatever happens next in Doha. 2. Halliburton (NYSE: HAL) Halliburton trades around $34. Citi's price target is $52. That gap is more or less the entire investment case. The first quarter showed why both numbers exist. Middle East and Asia revenue fell 13% year over year to $1.3 billion as the war hit drilling activity across Saudi Arabia, Qatar, the UAE, Iraq and Kuwait, costing the company an estimated 2 to 3 cents a share. Yet adjusted EPS of 55 cents still beat the 50-cent consensus and operating income jumped 56% to $679 million, with CEO Jeff Miller calling North America's recovery still in its “early innings.” What hasn't happened yet is the actual rebound in Gulf drilling activity. Saudi Arabia, Qatar and Iraq are still well below prewar levels, and Halliburton kept its crews and equipment in place through the war instead of pulling back, a decision one Melius Research analyst says positions the company to catch that demand once it returns. Shares have fallen 14% in the past month anyway. Either the market doesn't believe the rebound is coming soon, or the stock simply got ahead of itself on the way up and is now sorting that out. 3. Frontline plc (NYSE: FRO) Frontline's stock hit a new 12-month high intraday on June 24 and closed down 5% the same day. Two days later, it fell another 6%. That kind of whiplash says a lot about what kind of stock this actually is. The world's largest VLCC operator made an enormous amount of money from the Strait of Hormuz being closed, not from it reopening. Longer voyages, rerouted cargoes and general chaos in crude trading patterns pushed spot VLCC rates above $100,000 a day and drove Frontline's adjusted profit to $344.9 million in the first quarter, the company's best showing since 2004. Frontline pays out its adjusted earnings per share as a dividend almost dollar for dollar, so the payout jumped too, roughly 50%, to $1.55 a share. Now the thing that made the stock is unwinding. BTIG raised its price target to $55 from $45 on June 24, arguing the reopening sets up the largest seaborne oil restocking cycle the tanker market has ever seen as Gulf states finally move crude they've been sitting on for months. Evercore, Danske Bank and Pareto don't see it that way; all three have downgraded the stock to Hold in recent months, betting the windfall rates simply revert once the disruption that created them is gone. Frontline's own CEO, Lars Barstad, has said tanker markets tend to thrive on instability, which is a fair description of the last four months, and an open question about the next four. 4. Valero Energy (NYSE: VLO) Valero doesn't need this list. Shares hit an all-time high of $265.61 on June 3 and are still trading near $259, comfortably above where they sat before the war even started. First-quarter EPS of $4.22 crushed the $3.16 consensus. Refining margin per barrel jumped to $16.06 from $9.56 a year earlier on unusually wide crude differentials and surging distillate cracks; ultra-low-sulfur diesel margins over Brent more than doubled, to $27.60 a barrel from $16.69. Some of that has nothing to do with Iran: a March explosion knocked out Valero's 380,000-barrel-a-day Port Arthur refinery, which has only partially restarted, and U.S. refining capacity is tight enough on its own that crack spreads aren't about to collapse just because a war ends. Some of it is Hormuz-specific: jet fuel exports cratered during the closure and are recovering now as the strait reopens, a tailwind that plays directly to Valero's export business. Wall Street keeps raising targets through the noise, Mizuho to $289, Citi to $259, though Wolfe Research is the outlier with an Underperform call and a $203 target on the bet that these spreads can't hold. Either way works for Valero. It makes money if the peace holds, and it was making money before the peace process even started. 5. KBR, Inc. (NYSE: KBR) KBR has nothing to do with tankers, drilling rigs or refining margins. It's a bet on what gets rebuilt after the shooting stops. The Houston-based engineering and government-services contractor has quietly built a real footprint in Iraqi energy infrastructure over the past couple of years: integrated field management for Basra Oil's giant Majnoon field, detailed engineering on the AGUP2 gas project with TotalEnergies and QatarEnergy, an advisory contract with Iraq's Ministry of Planning, and, in recent weeks, a detailed-engineering win on a Qatari offshore project. The bull case leans on the $300 billion in regional reconstruction financing the U.S. committed to in the Islamabad memorandum, money aimed at the broader region rather than Iraq specifically, but exactly the kind of pipeline KBR's existing relationships put it in position for. None of that shows up in the numbers yet. First-quarter revenue slipped 5% to $1.9 billion on a planned runoff of European military work, though adjusted EPS of 96 cents beat estimates, and management says it hasn't seen Middle East clients pull back capital spending despite the war. The stock has been priced for trouble rather than opportunity, down roughly a third over the past year to around $32, against analyst targets mostly still sitting in the $40s to $50s after a string of recent price-target cuts. KBR is also mid-spin, planning to separate its Mission Technology Solutions arm by January 2027, which adds its own complexity to the story. This is the smallest, most speculative pick on the list: a name that wins only if reconstruction money actually shows up in contract awards, not just in a memorandum's fine print. By Michael Kern for Oilprice.com More Top Reads From Oilprice.com