The smoke rising over the Strait of Hormuz is recalibrating the global asset pricing scale.
In early July 2026, tensions between the US and Iran escalated sharply. On July 7, the US announced it would reinstate oil sanctions on Iran. The next day, during the NATO summit, President Trump declared the US-Iran memorandum of understanding "null and void" and ordered a new round of strikes against Iran. According to US Central Command, these strikes targeted around 90 military sites. In response, Iran launched missile and drone attacks on US facilities in Bahrain, Kuwait, Qatar, and Jordan. This escalation came less than a month after the US and Iran signed a memorandum of understanding on June 18, shifting from confrontation to dialogue.
Yet, contrary to what classic geopolitical risk models would predict, international oil prices did not surge dramatically. As of July 10, WTI crude futures settled at $72.08 per barrel, down $1.44 or 1.96%. Brent crude futures closed at $76.30 per barrel, down $1.72 or 2.2%. The simultaneous escalation of geopolitical conflict and decline in oil prices—a counterintuitive market phenomenon—has become the central paradox worth dissecting in today’s analysis. By examining how geopolitical tensions transmit to energy stock valuations, we’ll explore why ExxonMobil has become the focal point for capital flows, and further discuss the potential impact of oil price trends on inflation, Federal Reserve policy, and risk assets like Bitcoin.
Why Do Geopolitical Conflicts Benefit Energy Stocks? — The Transmission from "Risk Premium" to "Profit Realization"
During periods of geopolitical risk, energy stocks are often among the few sectors that stand to benefit. However, their gains don’t stem from the "conflict itself," but rather from a verifiable industry chain transmission:
Rising geopolitical tensions → Market concerns over oil supply → Higher international oil prices → Improved earnings expectations for energy companies → Capital inflows into energy stocks.
This logic was fully validated in the first half of 2026. In early March, shipping disruptions in the Strait of Hormuz pushed Brent crude futures briefly to $118 per barrel. Although the rally quickly reversed, the energy value chain experienced a full "roller coaster" ride.
What’s unique about this round of US-Iran conflict escalation is that the market views the skirmish as a "contained escalation." Guosen Futures notes that mediators are working to prevent the latest flare-up from escalating into a full-blown conflict, and the market expects both sides to return to negotiations after tensions rise. This expectation led WTI crude prices to fall 2.33% to $71.81 per barrel on July 10.
However, "contained escalation" does not mean "no impact." Goldman Sachs points out that if shipping through the Strait of Hormuz is disrupted again due to heightened tensions, the recovery of Middle Eastern oil supply could stall. According to Goldman’s estimates, crude output in the Persian Gulf in June remained about 10.5 million barrels per day below pre-war levels. In the first 10 days after the Strait reopened, Persian Gulf oil shipments recovered to over 80% of pre-war levels, but a recent surge in tanker attacks has introduced new uncertainties.
Looking at capital flows, market appetite for the energy sector is rebounding. On July 8, the oil and petrochemical sector led all industries in net financing inflows on China’s A-shares, with a net purchase of 124 million yuan that day. In the US, energy stocks rallied in pre-market trading on July 8, with Shell up over 4%, TotalEnergies up more than 3%, and ExxonMobil and Chevron also posting gains. These figures indicate that even with short-term pressure on oil prices, medium-term earnings expectations for energy stocks are improving.
Why Is ExxonMobil the Market’s Focus? — The Triple "Oil Price Leverage" of a Global Energy Giant
As one of the world’s largest integrated energy companies, ExxonMobil (XOM) has once again become a core focus for investors amid rising geopolitical risks. There are three main reasons behind this:
First, a business structure highly sensitive to oil prices. ExxonMobil’s operations span upstream oil and gas production, refining, and global trading. The profitability of its upstream segment is closely tied to crude prices—every $1 per barrel increase in oil prices can boost annualized upstream profits by hundreds of millions of dollars. Brent crude rose about 23% quarter-over-quarter in Q2 2026, directly driving profit improvements in ExxonMobil’s upstream business.
Second, sharply upgraded earnings forecasts. ExxonMobil is set to release its full Q2 results on July 31. According to consensus estimates compiled by LSEG, ExxonMobil’s adjusted earnings for the quarter are expected to reach $15.7 billion—about three times Q1’s total. Other market forecasts put Q2 net profit at $14.414 billion, up 103.52% year-over-year. The company itself expects Q2 upstream revenue to hit $9.6 billion, the highest since September 2022. Investors are also watching free cash flow, shareholder return plans, and management’s outlook on oil prices.
Third, institutional capital reallocation. In terms of share price, ExxonMobil closed at $141.69 on July 7, surged to an intraday high of $143.99 on July 8, then pulled back to $137.46 on July 9. On July 8, trading volume hit $2.588 billion, ranking 35th among US stocks that day. The significant increase in trading volume reflects institutions reassessing the value of energy sector allocations, with ExxonMobil, as an industry leader, naturally becoming a primary destination for capital inflows.
How Does Rising Oil Impact Global Markets? — From Inflation Expectations to Asset Repricing
The impact of rising oil prices on global markets isn’t linear. Instead, it unfolds through a clear macro transmission chain:
Escalating geopolitical conflict → Higher crude prices → Rising inflation expectations → Changes in Fed policy outlook → Increased volatility in global risk assets → Simultaneous effects on gold, the US dollar, Bitcoin, and US equities.
Currently, US year-over-year inflation has reached 4.1%, well above the Federal Reserve’s 2% target. Minutes from the Fed’s June policy meeting show participants noted further increases in inflation, mainly attributed to ongoing tariff effects, supply chain disruptions linked to the Strait of Hormuz closure, and robust AI-driven investment demand.
There are clear divisions within the Fed regarding the future policy path. Some members anticipate inflation will cool, creating room for rate cuts; others believe prices will remain elevated, requiring additional hikes. In the Fed’s dot plot of economic rate projections, nine officials support at least one rate hike this year. According to a Deutsche Bank report, the committee as a whole has abandoned its previous forecast of rate cuts, splitting into two camps.
As of July 10, CME’s "FedWatch" tool shows a 74.9% probability the Fed will hold rates steady in July, and a 25.1% chance of a 25-basis-point hike. For September, the odds of no change drop to 35.7%, with a 51.1% probability of a 25-basis-point hike. Prediction market platform Kalshi indicates traders see roughly a 54% chance of a rate hike by year-end.
Against this macro backdrop, global risk assets are under renewed repricing pressure. Gold, a classic safe haven, rose 1.1% to $4,121.67 per ounce on July 10. Risk assets, however, are more complex—affected both directly by geopolitical shocks and indirectly by shifting monetary policy expectations.
Can Energy Stocks Continue to Rally? — Two Scenario Analyses
The outlook for energy stocks hinges largely on how the US-Iran situation evolves.
Scenario 1: Prolonged or escalating conflict. If shipping through the Strait of Hormuz remains disrupted, oil prices will likely stay elevated or climb further. Goldman Sachs sees dual risks for Persian Gulf oil flows and prices: if negotiations over the next 60 days proceed and shipping security is restored, supply could recover by the end of July; if talks break down and tanker attacks intensify, oil flows will decline further. Under a sustained conflict scenario, the logic for improved energy sector earnings holds, and the sector should benefit. However, investors should watch for demand destruction if oil prices rise too quickly—the US Energy Information Administration expects global crude demand to drop by 1.2 million barrels per day in 2026.
Scenario 2: Easing tensions. If the US and Iran return to negotiations and reach a new compromise, oil prices could quickly retreat, narrowing energy stock gains and prompting capital rotation back to growth stocks. Notably, the US and Iran are still engaged in "technical negotiations" on nuclear issues. A US official stated, "The United States remains committed to seeking solutions." This suggests diplomatic channels remain open, and a phase of easing is possible.
In summary, energy stock performance will continue to depend heavily on real-time international developments, and any one-sided bets carry significant uncertainty.
What Does Rising Oil Mean for Bitcoin? — Short-Term Pressure vs. Long-Term Structural Factors
For Gate users, the key question is: What’s the actual relationship between rising oil prices and Bitcoin?
In the short term, the transmission chain is relatively clear:
Rising oil prices → Increased inflation pressure → Market reassesses rate expectations → Lower risk appetite → Short-term pressure on high-volatility assets like Bitcoin.
As a non-yielding asset, Bitcoin faces higher opportunity costs in a high-rate environment, which often dampens institutional allocation. This is evident in Bitcoin ETF flows: after eight consecutive weeks of outflows, US spot Bitcoin ETFs saw a brief return of inflows in early July. On July 8, Bitcoin ETFs again recorded a net outflow of $84.9 million. The back-and-forth in ETF flows reflects institutional investors’ ongoing concerns about macro uncertainty.
However, it’s important to note that Bitcoin’s pricing logic isn’t solely as a "risk asset." On July 10, Bitcoin showed resilience under multiple pressures—trading in the $63,900 to $64,050 range, with a 24-hour gain of about 3% to 3.5% and a market cap around $1.28 trillion. After several days of declines, the crypto market rebounded overall, with the RWA sector up 4.28% in 24 hours.
Bitcoin’s long-term trajectory will depend on several factors: the persistence of ETF inflows—Bitcoin ETFs posted three straight days of positive flows in early July, totaling tens of millions of dollars, and whether this trend continues will directly impact market confidence; the global liquidity environment—if the Fed eventually pivots to rate cuts due to economic weakness, Bitcoin will benefit from easier liquidity; the duration of geopolitical risks—if conflict persists, Bitcoin’s "digital gold" safe-haven narrative could be repriced by the market.
Conclusion
Renewed US-Iran tensions are transmitting pressure from the oil market to the global asset pricing system. As the world’s leading energy giant, ExxonMobil’s improving earnings outlook and share price volatility essentially reflect the market’s pricing of the transmission chain from geopolitical risk → oil prices → corporate profits. The broader macro logic of oil price increases impacting inflation, Fed policy, and risk assets underpins a new round of global asset repricing.
For investors, the core dilemma is that while geopolitical risk premiums are partly priced in, uncertainty around inflation and interest rate paths is intensifying. Whether energy stocks can maintain their relative strength depends on whether the conflict escalates or eases; the short-term pressure and long-term potential for risk assets like Bitcoin will require finding structural opportunities amid macro uncertainty.
As the smoke over the Strait of Hormuz lingers, the global asset pricing scale will continue to swing between geopolitics and macroeconomics. Only by maintaining a clear understanding of the transmission logic can investors navigate volatility and find direction.
FAQ
Q: Why hasn’t the US-Iran conflict sent oil prices soaring?
The market views this clash as a "contained escalation," with mediators working to prevent a full-scale war and both sides still engaged in technical nuclear talks. Additionally, OPEC crude output in June rose by 2.2 million barrels per day compared to May, partially easing supply concerns.
Q: What are ExxonMobil’s Q2 earnings expectations?
According to consensus estimates from LSEG analysts, ExxonMobil’s adjusted Q2 earnings are expected to reach $15.7 billion—about three times Q1’s total. The company itself expects upstream revenue to hit $9.6 billion, the highest since September 2022. Official results will be released on July 31.
Q: Will the Fed raise rates in July?
As of July 10, CME "FedWatch" shows a 74.9% probability of no rate change in July, and a 25.1% chance of a 25-basis-point hike. The market generally sees a low chance of a July hike, but the odds for September have risen to 51.1%.
Q: Is rising oil bullish or bearish for Bitcoin?
In the short term, higher oil prices boost inflation expectations, which may prompt the Fed to maintain a tight policy stance—putting pressure on risk assets like Bitcoin. Over the long run, Bitcoin’s performance will depend on ETF flows, global liquidity, and the persistence of geopolitical risks.
Q: How important is the Strait of Hormuz for global energy supply?
The Strait of Hormuz is one of the world’s most critical oil shipping routes. Goldman Sachs estimates that Persian Gulf crude output in June remained about 10.5 million barrels per day below pre-war levels. Shipping disruptions in the strait directly impact global oil supply, driving up prices and intensifying inflationary pressures.
