The global energy sector is bracing for a sustained period of elevated earnings, as the closure of the Strait of Hormuz forces a revision of price expectations and profitability for the world's biggest oil and gas producers, Moody's Ratings strategists said in a Monday note.
In a mid-year industry update, Moody's maintained the positive outlook it assigned to the global energy industry in April but said it now expects even stronger earnings growth this year, driven by higher oil prices.
The ratings agency expects Brent crude to trade mostly between $90 per barrel and $110/bbl through much of 2026, with periods of sharp volatility, before easing toward $80/bbl in Q2 2027.
The agency's base-case scenario assumes a sustained disruption to oil shipments through the Strait of Hormuz that gradually eases later in 2026.
Global markets are projected to rely heavily on commercial inventories, strategic petroleum reserves and coordinated stock releases by the International Energy Agency until normal flows via the strategic waterway resume.
Higher prices will support stronger earnings growth across most segments of the energy industry, Moody's said, while cautioning that prolonged price spikes or fuel rationing could eventually undermine economic activity and energy demand.
Exploration and production companies are expected to be among the biggest beneficiaries of the tighter market.
Moody's said crude producers in North and South America, particularly those with limited exposure to the Middle East, are positioned to capitalize on higher crude prices while maintaining disciplined spending plans.
The agency said that US natural gas-focused producers should also benefit from stronger domestic gas prices, driven by growing liquefied natural gas exports, rising electricity demand and wider LNG price spreads resulting from disruptions in the Persian Gulf.
Refiners are also projected to benefit from tighter product markets. Diesel and jet fuel margins have strengthened as inventories decline and supply chains remain constrained.
"Although crack spreads remain elevated, their durability is uncertain and the prospect of eventual demand destruction implies longer-term risks for earnings," strategists said.
Though gasoline margins are projected to improve during the peak summer driving season, Moody's said that persistently high fuel prices could eventually curb demand.
"Gasoline margins should also benefit from stronger summer demand and refinery yield shifts toward diesel and jet fuel," according to the note.
Moody's said refining profitability is likely to become more evident in Q2 earnings reports, particularly for operators with access to lower-cost crude supplies. US refiners retain advantages over competitors in Europe and Asia, supported by strategic reserve releases and relatively favorable access to feedstocks.
The agency said integrated oil majors stand to gain from a combination of higher crude prices, stronger LNG markets and increased trading profits. Companies, including ExxonMobil (XOM), Chevron (CVX) and TotalEnergies (TTE), benefit from production growth outside the Persian Gulf, helping offset disruptions in the region.
State-owned Gulf producers are projected to see lower output volumes, partially compensated by higher prices.
"Large Gulf-based national oil companies are likely to offset lower volumes with significantly higher prices, although production risks remain elevated until the conflict is resolved," according to the note.
Moody's cited Saudi Aramco, which reported a 26% increase in Q1 profit from a year ago.
However, the outlook is less favorable for oilfield services providers. Moody's said geopolitical tensions have increased operating, logistics and insurance costs, limiting earnings growth despite strong activity levels in some international markets.
The agency said demand in the Middle East is projected to recover in late 2026 and 2027 once shipping routes open and investment activity resumes.
"East is likely to rebound in late 2026 and 2027 with revived activity following a reopening of the Strait of Hormuz," strategists said.
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