Oil and gas stock ranking in July: The stock that flew by 24% and the tycoon who profited
After the collapse of oil prices brought down the sector in June, July provided an almost perfect mirror image. This time, it was the renewal of tensions around the Strait of Hormuz that pushed oil prices back up, and with them the stocks. The company that fell the hardest last month led the surge.
July was a month of correction on the stock exchange, and few sectors illustrated this better than the energy sector. The oil and gas index jumped by 9.17%, almost completely erasing the decline of June (8.80%). As recalled, in June oil prices crashed when progress in understandings between the USA and Iran reopened the Strait of Hormuz, and the geopolitical premium disappeared. In July, the direction reversed.
The main catalyst was the return of uncertainty. During the month, cracks appeared in the ceasefire, reports of renewed friction around Hormuz, and question marks regarding the implementation of the agreement brought the risk premium back to the oil market. The result: the price of a barrel of Brent, which fell in June to the 70-dollar range, climbed back toward 85 to 90 dollars. And when the price of oil rises, energy stocks rise with it.
Within the sector, the "return to the mean" phenomenon stood out with intensity. Tamar Petroleum, owned by Aaron Frenkel, which led the declines in June with a drop of more than 11%, became the star of the month with a sharp jump of 24.49%. Following it was Energean, which also fell sharply last month, jumping 14.22%.
The rest of the companies recorded decent gains: Isramco (7.86%), NewMed Energy (7.69%), Navitas (7.11%), and Delek Group (6.29%). At the bottom of the table, with the most moderate gains, closed Naftas (3.72%) and Ratio (3.16%), the two companies that also fell the least in June. The pattern is clear: the sharper the fall last month, the stronger the recovery this month.
A significant portion of the Israeli companies in the sector, led by NewMed, Tamar, and Energean, rely mainly on natural gas reservoirs (Leviathan, Tamar, and Karish) and sell the product in long-term contracts at relatively fixed prices. Their cash flow is much more stable than the sharp price fluctuations might suggest.
The June crash was largely an exaggerated reaction that disconnected the stocks from their business fundamentals, and that is exactly what prepared the ground for the sharp jump in July. On the other hand, it is worth remembering that renewed tension is not only good news for the sector: a real escalation could also threaten the continuity of production in the Israeli reservoirs themselves, as happened in previous rounds of fighting.
For the Israeli investor, this is a reminder of how much the energy sector depends on headlines from the field. Oil and gas stocks constitute a significant holding in leading indices and pension savings, so fluctuations in them directly affect long-term savings.
But here also lies the familiar double-edged sword: the same rise in oil prices that boosted stocks in July is less good news for you as consumers, as it may later translate into higher fuel prices at the station and the return of cost-of-living pressures. What is good for the investment portfolio of those who hold energy stocks is less good for the bank account of the general public at the end of the month.
The continuation depends almost entirely on the geopolitical arena. If calm returns and stabilizes, oil prices are expected to fall again, and with them the stocks. Any further escalation could launch them back up. In this sector, more than any other, headlines from the Middle East are what determine the direction.
