Exxon Mobil, Chevron, Occidental Petroleum In Focus As Expert Says 'US Economy Is Far Less Sensitive To An Oil Shock' Amid Israel-Iran Conflict
As global tensions in the Middle East highlight a volatility in the oil markets, an expert suggests the U.S. economy’s susceptibility to oil price shocks has significantly diminished compared to previous decades.
What Happened: According to Bob Elliott, the CIO of Unlimited Funds, the shift in the mechanical impact of rising oil prices is primarily due to the United States’ transition into a net exporter of crude products.
Traditionally, oil price surges acted as a significant drag on household spending and often prompted central banks to adopt tighter monetary policies to combat inflation. However, Elliott’s detailed examination reveals a changed landscape.
While consumer gasoline prices might still see a moderate uptick following price increases, the overall impact on household consumption is far less profound. Spending on fuel has fallen to a mere 1.3% of total household consumption, making recent price movements “not noticeable” in the broader economic context, Eliott explains.
“The surge in US production to the point where the US is a net exporter highlights how an oil shock may not be nearly as detrimental as in past rounds. While it would create a drag on HH consumption and rising inflation, it will also support domestic production & investment,” he said in an X thread.
Furthermore, the surge in domestic oil production means that higher prices now generate increased income for U.S. oil producers, offsetting some of the drag felt elsewhere. This domestic boost in income and the incentive for greater production efforts highlight a crucial difference in the economic equation.
Here’s a list of a few U.S. oil producers and oil ETFs.
| Listed Oil Companies | Friday’s Performance | YTD Performance | One-Year Performance |
| Exxon Mobil Corp. (NYSE:XOM) | 2.18% | 4.48% | 3.47% |
| Chevron Corp. (NYSE:CVX) | 0.65% | -0.55% | -4.75% |
| Occidental Petroleum Corp. (NYSE:OXY) | 3.78% | -6.75% | -22.84% |
| EOG Resources Inc. (NYSE:EOG) | 3.89% | 0.46% | 5.21% |
| Marathon Petroleum Corp. (NYSE:MPC) | 0.65% | 17.43% | -3.25% |
| CVR Energy Inc. (NYSE:CVI) | 4.95% | 43.50% | -0.37% |
| Schlumberger NV (NYSE:SLB) | 1.88% | -5.47% | -16.80% |
| Listed Oil ETFs | Friday’s Performance | YTD Performance | One-Year Performance |
| United States Oil Fund LP (ARCA” USO) | 6.89% | 4.28% | 4.28% |
| ProShares Ultra Bloomberg Crude Oil (NYSE:UCO) | 8.65% | -7.44% | -19.06% |
| SPDR S&P Oil & Gas Exploration & Production ETF (NYSE:XOP) | 2.67% | -1.51% | -6.96% |
See Also: Is US Dollar Losing Its Edge? De-Dollarization And Fading Exceptionalism Raise Alarms
Why It Matters: Despite escalating conflict, Iran has notably reduced its missile barrages on Israel, with the Institute for the Study of War (ISW) attributing this to the effectiveness of Israeli airstrikes.
Early waves on Friday and Saturday saw Iran launching 100-200 missiles per wave. However, subsequent attacks have dropped to 35-40 missiles each, indicating a significant impact on Iran’s launch capacity.
Initial estimates placed Iran’s missile stockpile at around 2,000, with an alleged plan to fire 1,000 ballistic missiles. Yet, Israeli strikes reportedly damaged or destroyed numerous launchers and silos, limiting Iran to just 200 launches. This suggests Iran may soon face difficulties sustaining its current missile attack rate.
Price Action: As of the publication of this article, Crude Oil WTI Futures were 1.32% lower at $70.47, and Brent Oil was down 1.24% to $73.31.
The SPDR S&P 500 ETF Trust (NYSE:SPY) and Invesco QQQ Trust ETF (NASDAQ:QQQ), which track the S&P 500 index and Nasdaq 100 index, respectively, rose in premarket on Monday. The SPY was up 0.50% at $599.99, while the QQQ advanced 0.56% to $529.93, according to Benzinga Pro data.
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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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