Closure of Strait of Hormuz Disrupts Global Energy Markets
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Mar 25 2026
0mins
Should l Buy DVN?
Source: NASDAQ.COM
- Oil Price Surge: The International Energy Agency reports that 25% of the world's seaborne oil flows through the Strait of Hormuz, and its closure has led to a sharp increase in oil prices, destabilizing global energy markets, particularly affecting import-dependent nations.
- LNG Trade Disruption: Approximately 20% of global LNG trade passes through the Strait, and Iran's threats to energy infrastructure create uncertainty in LNG supply, potentially driving up global prices, especially pressuring the European market.
- Refining Sector Gains: Due to crude oil supply shortages, the refining crack spread has skyrocketed from $20 at the beginning of the year to $58, significantly boosting stocks of refining companies like PBF Energy and Valero Energy, indicating strong profit potential in the current market environment.
- Fertilizer Price Increases: The blockade of the Strait has left many fertilizer-laden ships stranded, causing fertilizer prices to soar, which poses a significant challenge for Asian and African countries reliant on Gulf fertilizers, prompting investors to focus on U.S. producers like CF Industries.
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Analyst Views on DVN
Wall Street analysts forecast DVN stock price to fall
20 Analyst Rating
18 Buy
2 Hold
0 Sell
Strong Buy
Current: 45.610
Low
41.00
Averages
45.53
High
55.00
Current: 45.610
Low
41.00
Averages
45.53
High
55.00
About DVN
Devon Energy Corporation is an oil and gas producer in the United States with a diversified multi-basin portfolio headlined by an acreage position in the Delaware Basin. The Company is primarily engaged in the exploration, development and production of oil, natural gas and natural gas liquids (NGLs). It owns a portfolio of assets located in the Delaware Basin, Rockies, Eagle Ford and Anadarko Basin. The Delaware Basin operates in southeast New Mexico and across the state line into west Texas. It offers exploration and development opportunities from many geologic reservoirs and play types, including the oil-rich Wolfcamp, Bone Spring, Avalon and Delaware formations. Its Rockies development consists of its Williston Basin and Powder River Basin assets. The Eagle Ford operations are located in Texas' DeWitt and Karnes counties. The Anadarko Basin development is located in western Oklahoma. It has a joint venture with Dow to develop a portion of its Anadarko Basin acreage.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Global Oil Shortage: Shell CEO Wael Sawan warns of a current shortfall of 1 billion barrels of oil, a sentiment echoed by Halliburton CEO Jeffrey Miller, indicating that this shortage will exacerbate rising oil prices and impact global economic stability.
- Consensus Among Executives: CEOs from Chevron and ExxonMobil agree that it will take months to rectify the growing supply-demand imbalance, highlighting the profound effects of current geopolitical conflicts on the oil market, which necessitates cautious investor strategies.
- Dividend Performance Discrepancy: While Shell offers a dividend yield of 3.4%, Chevron and Exxon have a stronger track record of dividend growth at 3.9% and 2.8% respectively, making them more attractive for long-term investors seeking stability.
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- Industry Response: CEOs of Chevron and ExxonMobil concur that it will take months to rectify the supply/demand imbalance once the conflict ends, indicating that the oil supply shortfall will worsen in the interim, potentially leading to increased volatility in oil prices.
- Investment Strategy: In the current high oil price environment, investors are advised to focus on integrated energy giants like Shell, Chevron, and Exxon, noting that while Shell cut its dividend in 2020, Chevron and Exxon have consistently increased theirs, demonstrating stronger financial stability.
- Dividend Yield Comparison: Currently, Chevron offers a dividend yield of 3.9%, Exxon at 2.8%, and Shell at 3.4%, making Chevron the most attractive option among integrated majors for long-term investors, especially as oil prices are expected to decline, providing reliable dividend income.
See More
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- Asset Divestiture Potential: Analysts noted that divesting non-core assets could eliminate debt and enhance returns, with Devon's Marcellus asset expected to sell at a premium to the current multiple, assuming an EBITDA of approximately $1.75 billion, potentially providing funds to retire $8.5 billion in outstanding debt by year-end 2026.
- Cash Flow Support: Jefferies analysts presented distributable cash flows that support their upside scenario, emphasizing the risk/reward relationship associated with a de-levered balance sheet and lower cost of capital, expecting Devon to return nearly 100% of free cash flow to shareholders post-sale, leaving around $7 billion, or 13% of market cap at $50/share.
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- Rating Upgrade: Jefferies upgraded Devon Energy from hold to buy and raised its price target from $53 to $62, implying a 37% upside from Thursday's close, reflecting a positive market outlook on its future performance.
- Valuation Advantage: With a forward price-to-earnings ratio of 8.28, Devon trades significantly below the S&P 500's multiple of over 21, indicating that the stock is undervalued and providing a compelling buying opportunity for investors, according to analysts.
- Divestiture Potential: The company is likely to divest from non-core assets such as the Marcellus Shale, which could eliminate debt and enhance returns, further strengthening Devon Energy's financial health and competitive position in the market.
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