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US E&Ps Gain as Oil Tops $100 on Iran Conflict, Limited Permian Growth, RBC Says

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US exploration and production equities rose last week as crude prices climbed above $100 per barrel and the Middle East conflict tightened global supply expectations, RBC Capital Markets strategists said in a note on Friday.

RBC analysts said that oil-weighted E&Ps gained 5% over the period, while gas-weighted peers rose 2%, with large-cap names up 5% and small- to mid-cap names advancing 3%.

The XOP energy ETF increased 5%, tracking a 10% jump in WTI and a 6% rise in Henry Hub natural gas prices.

RBC said Q1 earnings for US E&Ps are "slightly better than expected" so far, though it noted limited signs of a broad pickup in activity.

The bank pointed to a modest uptick in Permian rig counts, which it attributed in part to constrained gas takeaway capacity rather than a broader acceleration in drilling.

Meanwhile, global crude markets were supported by ongoing geopolitical risks, including stalled diplomatic efforts and ongoing concerns about disruption in the Strait of Hormuz.

RBC said reports of potential escalation in the region added to risk premiums and pushed Brent-linked sentiment higher.

The bank also highlighted structural shifts in global supply dynamics following the UAE's effective exit from OPEC capacity discipline, which is expected to remove a significant portion of spare capacity from the group's policy toolkit.

RBC said the UAE's departure from OPEC leaves Saudi Arabia with a heavier burden in managing market stability.

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