TLDR
- Yardeni Research recommends overweighting S&P 500 Energy stocks after a recent selloff linked to ceasefire optimism
- Brent crude is expected to stay in a $75–$95 range, above the pre-war $55–$75 range, due to lasting infrastructure damage
- The Energy sector ETF is up 25% year-to-date but has dropped 10% since Trump announced a ceasefire on April 7
- Energy stocks now trade at around 16x forward earnings, compared to 23.9x for the broader S&P 500
- The Iran ceasefire is set to expire April 22, and Iran has refused further talks unless the U.S. lifts its port blockade
Ed Yardeni, founder of Yardeni Research, has flipped back to overweight on S&P 500 Energy stocks for the first time in two years. He made the call this week after a sharp pullback in the sector triggered by optimism over a possible end to the Iran war.
“We are inclined to use the recent selloff to overweight the sector,” Yardeni wrote in a note on Monday.
The Energy Select Sector SPDR Fund was the top-performing S&P 500 sector for most of 2026. By March 27, it was up over 40% year-to-date, driven by crude oil trading above $100 per barrel.
That changed on April 7, when President Trump announced a two-week ceasefire. Since then, the fund has dropped around 10%, making it the worst-performing sector over that period. Every other sector has been flat or positive during the same window.
Despite the pullback, the fund is still up about 25% for the year, leading all 11 S&P 500 sectors.
Why Yardeni Thinks Oil Prices Won’t Fall Back
Yardeni’s core argument is that oil prices will not return to pre-war levels, even if the conflict ends. He expects Brent crude to trade between $75 and $95 per barrel going forward, up from the previous range of $55 to $75.
He points to two reasons. First, physical damage to energy infrastructure around the Arabian Gulf. Second, a lasting change in maritime insurance costs and shipping confidence through the Strait of Hormuz.
Even if the Strait fully reopens, Yardeni says supply disruptions will have a “long tail.”
Bank of America’s commodity team projects Brent averaging $93 per barrel in 2026, peaking at $103 in the second quarter before falling toward $78 in 2027. The bank estimates the oil market is running a 4-million-barrel-per-day deficit in Q2. Goldman Sachs puts Brent in an $80–$90 range under similar scenarios.
Energy Stocks Look Cheap Compared to the Broader Market
At current prices, Energy stocks trade at roughly 16 times forward earnings. The S&P 500 overall trades at about 23.9 times, and the Technology sector trades at around 30 times.
Yardeni also notes that Energy makes up just 3.3% of the S&P 500 by market cap, making it easy to overweight. He recommends a 5% to 10% allocation.
Oil and gas equipment and services companies are highlighted as the most leveraged play, with potential for large infrastructure rebuild contracts. Many energy stocks also offer attractive dividend yields.
The ceasefire between the U.S. and Iran is scheduled to expire on April 22. Iran has said it will not continue talks unless the U.S. ends its blockade of Iranian ports.
Yardeni wrote that overweighting Energy stocks “might be a good hedge against a resumption of the war.”
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