Big oil companies have gained $35 billion in value since the US quit the Iran deal

Precious cargo.
Precious cargo.
Image: Reuters/Jason Redmond
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It’s too early to tell how the US exit from the Iran deal will affect the global economy. But in the short time since the White House announced it was quitting the pact on May 8, things have been good in markets for large American energy companies.

Shares in Exxon Mobil, the largest US-based energy company, are up 4% since the close on Monday (May 7), the day before Donald Trump made the Iran announcement. That added more than $13 billion to Exxon’s market capitalization. Other big oil companies based in the US, like Chevron and ConocoPhillips, also made big gains over the same period.

At the time of writing, the five largest American energy companies have gained $35 billion in market value over the past few days.

The S&P energy index, which tracks the entire listed US energy sector, is up 3% since Monday, and nearly 10% over the past month.

Energy stocks are rising on the backs of surging oil prices, which reached a three-and-half year high, at $77 per barrel, this week. Some analysts think $100 per barrel may be on the way (paywall).

When Iran agreed to limit its nuclear capabilities in 2015, major countries like the US, UK, and China lifted sanctions on the country’s oil exports. But with renewed US sanctions soon to be reimposed, analysts are worried about a cut in supply. A report from Barclays estimates that the supply of Iranian oil could fall by as much as 170,000 barrels a day in 2019. Iran was the fifth largest exporter of oil last year.

If oil prices keep rising, energy companies will continue to celebrate, although it could hurt the American economy via higher inflation.