Oil: who's making money, where capital is flowing, and how far it could go
Who benefits
The biggest winners are oil giants with low production costs - $XOM, $CVX, $SHEL. Higher oil prices go almost entirely to their profits because production costs haven't risen.
US shale companies like $OXY or $FANG profit similarly, just with smaller margins.
Oil services companies $SLB, $HAL will make money later, once higher prices boost investment in new wells.
Capital is also flowing beyond oil itself. New LNG projects are emerging and nuclear investments are accelerating. Companies and governments are securing future energy security this way because the Middle East is uncertain again.
Oil states in the Persian Gulf, Russia, and Kazakhstan have higher export revenues, despite sanctions and war.
Where is capital moving?
Classic geopolitical rotation: money is leaving expensive growth and tech stocks (sensitive to rates and inflation) into energy and value sectors.
Consumer-dependent companies like airlines, retail, and automakers are suffering. More expensive diesel and jet fuel are squeezing margins and demand.
Some capital is going into gold as a classic safe haven as geopolitical risk rises.
Currencies of oil exporters are strengthening. Currencies of importers - euro, Turkish lira, Indian rupee - are currently under pressure.
Higher inflation expectations due to oil are pushing bond yields up, hurting long-term portfolios.
How far can prices go
The nearest psychological test is $100 per barrel – Brent is approaching it now.
If escalation around the Strait of Hormuz continues, Goldman Sachs analysts even see a $120 scenario.
The opposite scenario: once tankers return to normal operations, the price could drop back to $80–85. That's exactly what the US Energy Information Administration (EIA) expects in its latest third-quarter outlook.
The key things I'll be watching are tanker traffic through Hormuz and the OPEC+ meeting on October 4, where November production will be decided.
I hope this is just a geopolitical shock and not a fundamental shift in supply and demand. Prices can fall as quickly as they spike once the risk premium disappears. I think anyone buying oil stocks now just on headlines risks getting burned the moment things calm down.