Election results spark oil price concerns, analyst sees energy cool-down

For much of 2026, energy stocks have led market performance. Terranova’s assessment implies that a key driver of this growth may be diminishing.

Terranova attributes the recent energy price surge to a “war premium” linked to U.S. tensions with Iran. The Wall Street Journal reported that oil futures declined after the election results, fueled by expectations of a quicker resolution to the Middle East conflict. Vice President JD Vance even linked his party’s losses to the ongoing conflict, stating, “The reason we lost is the war.”

Oil prices had already begun to decline prior to the election. WTI crude spot prices peaked at $110.01 on October 19, falling to $99.64 on November 3, a decrease of $3.73 in a week.

Energy stocks mirrored this downward trend. The Energy Select Sector SPDR Fund (XLE) decreased by 7.1% over the past week, reaching $63.59, although it remains up 45.04% year-to-date. Exxon Mobil (XOM) fell 7.65% to $169.27, still up 40.66% for the year, while Chevron (CVX) dropped 6.26% to $216.96, maintaining a 42.35% year-to-date gain.

However, oil prices can fluctuate rapidly. WTI crude rose from $85.23 on September 25 to $99.37 on September 28. Steve Weiss cautioned that a potential “aggressive” move by a certain political figure regarding Iran could hinder the inflation story and trigger a “black swan event.”

OPEC+’s decision to maintain production targets and reluctance to implement further changes before next year also poses a risk. If peace talks falter, producers may not readily increase output.

Third-quarter earnings reports from major energy companies reveal the profits generated at elevated prices. Chevron reported adjusted EPS of $5.28, surpassing the $4.83 consensus, with Brent averaging $97 per barrel, up from $69 a year prior. The stock yields 2.9% with a quarterly dividend of $1.78 and trades at approximately 36 times trailing earnings. Exxon posted adjusted EPS of $4.23, exceeding estimates of $3.98, largely due to stronger refining margins, and announced a $20 billion buyback target for 2027 and a $1.07 fourth-quarter dividend. Exxon yields 2.38% at about 25 times earnings.

For retirement investors relying on energy dividends, buybacks may be at risk if oil prices decline. While companies have historically maintained dividends during downturns, current valuations leave little margin for error if earnings revert to 2025 levels.

Key indicators to watch include WTI prices remaining below Terranova’s $100 threshold, OPEC+ policy signals, and Chevron’s quarterly sensitivities. Exxon’s dividend payment record date is November 16, and Chevron’s is November 18, with both payments scheduled for December 10.