The IEA’s director general Fatih Birol has described the current situation at the Strait of Hormuz as the worst energy crisis in history. Oil – which is trading above $90 a barrel – is still 38% above where it traded the day before the conflict began.
At $4.09 per gallon nationally, and $5.86 in California, the pump is not signaling resolution.
Yet seven major energy producers and refiners — the companies that drill the oil, refine the gasoline, and collect the margin — are trading as if Hormuz is already open, the crisis is resolved, and crude is heading back to $65.
Their forward price-to-earnings multiples sit between 7x and 11x, roughly half the S&P 500’s consensus forward P/E of around 22x.
The disconnect is not subtle. It is structural.
The Energy Stocks That Didn’t Get The Memo
The State Street Energy Select Sector SPDR ETF(NYSE:XLE) is up 27% year-to-date, which sounds impressive until you consider that crude oil is up 38% from pre-war levels.
The sector has underperformed its own commodity — and pulled back 10% from its March peak — even as the underlying supply disruption has not materially improved.
That compression is where the opportunity, and the risk, lives.
The April drawdown is the mechanism that created this entry point.
Every name in the table has sold off between 5% and 14% month-to-date, even as WTI has held around $90 and Brent has pushed toward $95.
APA Corporation(NASDAQ:APA), the cheapest name at 7.2x forward P/E, has shed nearly 14% in April alone. Devon Energy Corporation(NYSE:DVN) trades at 8.6x forward earnings against a median analyst target implying 31.6% upside. Expand Energy Corporation(NASDAQ:EXE) — the lone name still negative on the year — carries the widest analyst upside in the group at 38.5%.
Forward price-to-earnings — next-twelve-months P/E — divides the stock price by the earnings analysts expect the company to produce over the coming year. A lower number means investors are paying less for each dollar of expected profit. At 7x to 11x, these names are priced as though the energy cycle ends soon.
Refiners Marathon Petroleum Corporation(NYSE:MPC) and Valero Energy Corporation(NYSE:VLO) present their own logic: crack spreads — the margin between crude input cost and refined product price — typically widen when crude stays elevated and demand holds.
Both names trade below 11x forward earnings despite a supply environment that should structurally support refining margins through the summer driving season.
Company
P/E (Next Twelve Months)
Analyst Target Upside (Med.)
MTD
YTD
APA Corporation
7.2x
+9.3%
−13.8%
+49.6%
Devon Energy Corporation
8.6x
+31.6%
−10.1%
+23.5%
EOG Resources, Inc.
9.5x
+12.2%
−8.4%
+26.1%
Expand Energy Corporation
10.7x
+38.5%
−12.5%
−13.0%
Marathon Petroleum Corporation
10.7x
+9.4%
−8.7%
+37.1%
Valero Energy Corporation
11.2x
+8.1%
−4.9%
+44.4%
Coterra Energy Inc.
11.3x
+13.9%
−10.1%
+20.1%
What’s The Market Actually Pricing In?
Energy stocks have always traded at a discount to the broader market, reflecting the cyclical nature of commodity earnings. But a 50%-plus discount in an environment where oil has been above $80 for more than six weeks — and where there is no immediate resolution to the Strait of Hormuz disruption — is unusual.
The explanation lies in what the market is implicitly pricing. Investors assigning a 7x or 8x multiple to an oil producer are assuming one of two things: either the oil price collapses back toward $60 on a ceasefire, or the earnings cycle peaks before they can compound.
Both are reasonable risks. Neither is certain.
The disconnect is sharpest at APA Corp., which trades at 7.2x forward earnings despite a 49.6% year-to-date return — still the lowest multiple among large-cap U.S. producers.
Devon Energy Corp. shows the most analyst conviction, with a median price target implying 31.6% upside from current levels despite an already strong run.
What This Means For Investors
The valuation gap is a two-sided trade. On one side, if the Hormuz disruption proves durable — no ceasefire, no rerouting solution that meaningfully restores flow — then $90 oil becomes the floor, not the ceiling, and 7x to 11x multiples look like a significant mispricing.
Every dollar of oil above $70 flows almost directly to free cash flow for low-breakeven producers like EOG Resources and Coterra Energy.
On the other side, a rapid ceasefire and Strait reopening could bring oil back toward $65 to $70 within weeks, compressing earnings and making current multiples look less attractive in hindsight.
The market is not wrong to embed that optionality — it is simply the question of which scenario deserves more weight.
Seven of the cheapest stocks in the S&P 500 right now happen to be in the sector with the most direct exposure to the defining macro story of 2026.
Whether that is an opportunity or a trap depends entirely on a waterway 7,000 miles from Wall Street.
