Oil risk lifts focus on refiners, uranium and AI power suppliers

Oil market risk tied to the Strait of Hormuz and Russia’s war in Ukraine is feeding through to bond yields, refined fuel prices and energy equity estimates. CNBC reported that the U.S. 10-year Treasury yield has moved back above 4.6% as oil-driven inflation concerns returned to the rates debate.

The latest pressure has come from maritime security threats near Hormuz and Ukrainian drone attacks on Russian refining assets. CNBC cited recent Iranian attacks on ships, including two strikes on U.A.E. oil tankers, one of which resulted in a death, as well as a hit on Kuwait. It also reported that a proposed 20% security fee from President Donald Trump on shipping through the Strait of Hormuz was withdrawn shortly after being raised.

A levy of that size on a supertanker carrying oil could have exceeded $30 million, according to CNBC. Such a charge would have changed the economics of moving crude by adding a large cost before refining, shipping margins or end-user pricing were considered.

Oil shock has not met Deutsche Bank’s selloff thresholds

Analysts remain divided on the direction of crude. CNBC said the bullish case rests on Iran-related supply risk, declining global inventories, including the U.S. Strategic Petroleum Reserve, and resilient economic growth. OPEC has kept its global growth estimate at 3.2%, according to CNBC.

The bearish argument also points to inventory releases, but as evidence that the market remains supplied. CNBC reported that bears also cite weaker Chinese oil demand and the effect of Ukrainian attacks on Russian refineries.

The refinery mechanism cuts both ways. When Russian plants are damaged, they can process less crude into diesel and other refined products, which can lift product prices. At the same time, crude that cannot be refined domestically may be sold into the international market, increasing available Russian oil supply, according to CNBC’s discussion of J.P. Morgan analysis.

Deutsche Bank told clients that a large risk-asset selloff after an oil shock generally requires at least one of three conditions: a 50% to 100% oil price rise sustained over several months, a sharply more hawkish central-bank response, or wider macroeconomic damage that pushes a slowing economy toward recession. The bank said the current shock has not yet reached those thresholds.

Refiners and large oil producers draw attention

Seaport Securities strategist Jonathan Golub said on CNBC’s “Power Lunch” that the broader U.S. equity market remains inexpensive in part because earnings expectations continue to rise. CNBC reported that he put the S&P 500 forward price-to-earnings multiple at 19.5 times.

Energy companies account for 3% of the S&P 500 but generate 5% of its earnings, according to CNBC. Golub said energy company earnings are expected to double. CNBC noted that ExxonMobil, Chevron and ConocoPhillips have material exposure to higher crude prices, which has supported earnings estimates as oil has risen.

U.S. refiners have also benefited from the pricing pressure in refined products. CNBC reported that PBF Energy has doubled this year, while Par Pacific and Delek have also advanced sharply, though some refining shares are trading at or above average Wall Street price targets.

Analysts raise targets in uranium and AI-linked power

Truist Securities analyst Christopher Souther initiated coverage of Cameco with a buy rating and a $129 price target, which CNBC said implied about 40% upside. Souther described Cameco as a vertically integrated uranium business positioned for a favorable supply-demand outlook and higher uranium prices, according to CNBC.

Power demand tied to artificial intelligence data centers is also driving analyst interest in former bitcoin infrastructure companies. CNBC reported that TeraWulf signed a 20-year agreement with Anthropic worth $19 billion or more, CleanSpark reached a two-decade deal with a large technology customer in Georgia, and Hut 8 signed a 15-year, $9.8 billion agreement.

Morgan Stanley analyst Stephen Byrd remains positive on several of those companies, according to CNBC. His $72 target for TeraWulf implied the stock could triple, while his $48.50 target for Cipher Digital implied a gain of more than 100% from then-current levels.

Regulatory risk is also emerging. CNBC reported that New York became the first U.S. state to impose a one-year ban on new data centers. TeraWulf CEO Paul Prager told CNBC the order should provide “greater clarity and a sensible, practical path forward” through the Public Service Commission, and said it did not change the company’s expectations for its Lake Hawkeye project.

This story draws on original reporting from CNBC.