Oil Majors Post Strong Q2 Amid Political Pressure

West Texas Intermediate crude dropped to $75.98 from last week's $84, falling below the $78 level reached earlier in the week. The sharp decline has negated recommendations for energy and energy service stocks despite strong earnings from major producers. Middle East conflict has triggered disruptions in the Strait of Hormuz, pushing refining margins to record highs as global fuel supplies tighten across diesel, gasoline, and jet fuel markets.

ExxonMobil ($XOM) shares traded at $153.96 following strong Q2 2026 earnings that reflected elevated oil prices and record refining margins, generating $23.6B in cash flow from operations with a 6% free cash flow yield. $XOM posted a 30-day share price return of 12.31% and a year-to-date return of 25.53%, with a 5-year total shareholder return of 218.04%. President Trump publicly criticized both Chevron ($CVX) and $XOM, stating the companies made "too much money" after higher crude prices lifted oil profits, indicating political pressure on the sector despite strong financial performance. Despite the strong earnings, energy production stocks traded lower across the board as crude prices weakened.

EOG Resources ($EOG) more than doubled its Q2 net income as higher oil prices and a 24% increase in total production drove record financial results, with Q2 revenue beating estimates by 9.5% while EPS came in line with expectations. Devon Energy ($DVN) reported Q2 net earnings of $1.9 billion with revenue of $7.42B (up 80% year-over-year) and EPS of $1.57, beating estimates as production reached the upper end of its forecast following completion of its merger with Coterra Energy. $DVN completed a buyback of 4,300,000 shares for $197 million during the quarter, amplifying the impact of stronger earnings on per-share metrics with basic EPS from continuing operations reaching $2.04. Both companies delivered strong results despite the subsequent decline in crude prices.

Valero Energy ($VLO) received a price target increase of 15.06% to $303.31 and appeared on both Zacks Rank #1 Strong Buy value stocks and income stocks lists for August 5th, reflecting strong positioning in the refining sector. Par Petroleum ($PARR) beat Q2 estimates with earnings and revenue surprises of 23.17% and 19.90%, respectively, for the quarter ended June 2026. The refining sector has benefited from tightened global fuel supplies driven by Middle East conflict and disruptions in the Strait of Hormuz, with reduced Asian refining capacity and export restrictions squeezing diesel, gasoline, and jet fuel markets.

First Solar ($FSLR) stock has delivered a 154.4% gain over the past 5 years, with the market price potentially sitting below an intrinsic value estimate based on a Discounted Cash Flow analysis. Recent headlines around a large contracted sales backlog of 45 GW have drawn attention to the company's growth trajectory. The 5-year return of 154.4% has put long-term holders ahead of many broad equity benchmarks, though the current price remains sensitive to what the company can earn going forward.

Duke Energy ($DUK) reported Q2 2026 adjusted earnings of $1.43 per share, up from $1.25 per share a year earlier, as customer growth and infrastructure investment at its electric utilities supported results. Reported earnings came in at $1.38 per share, compared with $1.25 per share in the prior year period. Data center demand and industrial growth are fueling Duke's capital expansion plans, according to the company's Q2 earnings call.

The Iran war has tightened global fuel supplies through disruptions in the Strait of Hormuz, reduced Asian refining capacity, and export restrictions that have squeezed diesel, gasoline, and jet fuel markets. These supply disruptions have pushed refining margins to record highs, creating a new global refining boom even as crude prices have fallen. The geopolitical tensions have become a primary driver of downstream profitability, offsetting some of the impact from lower crude prices on upstream producers.