Hormuz event lifts oil and crack spreads, with differentiated benefits for oil majors, U.S. refiners, and midstream companies

Overview

This report is a UBS energy and midstream event note released on 2026-04-13, discussing the market impact after the United States announced a blockade of shipping related to the Strait of Hormuz following the failure of talks between Washington and Tehran. The report argues that the event will push up crude oil, European natural gas, and refined products tightness, and may amplify earnings sensitivity for oil majors, U.S. refiners, Canadian oil sands producers, and midstream pipeline companies.

Core views

The core view is that higher oil prices and rising European natural gas prices are overall positive for upstream or oil-sands-exposed companies such as XOM, CVX, SU, CNQ, IMO, and CVE; however, XOM and CVX also face direct operational disruptions from assets such as Ras Laffan LNG facilities and the Leviathan gas field. U.S. refiners benefit because they are less dependent on OPEC crude, Canadian heavy oil provides a substitute, and global product shortages intensify. Midstream companies benefit from stronger Permian activity, wider natural gas marketing spreads, and crude prices above guidance assumptions.

Analysis framework

The report uses an event-driven earnings sensitivity framework, mapping the impact of a Strait of Hormuz blockade on crude oil prices, European natural gas spreads, diesel crack spreads, refining margins, and Permian activity to the earnings elasticity of different energy companies and business segments. The analysis focuses on how each $1/bbl change in oil prices, each $1/bbl change in crack spreads, and each $1/MMBtu change in marketing margins affects after-tax earnings, pre-tax earnings, or EBITDA.

Methodology notes

• Event-driven sector sensitivity analysisOil price and spread earnings elasticity

  Convert changes in commodity prices, crack spreads, and natural gas marketing spreads into company earnings impact.

  The report uses each $1/bbl move in oil prices, each $1/bbl move in refining crack spreads, and each $1/MMBtu move in marketing margins to estimate earnings or EBITDA sensitivity for companies such as XOM, CVX, VLO, MPC, PSX, PBF, VG, and LNG.

• Valuation methodCombination of DDM and EV/EBITDA multiples

  Midstream/MLP valuation typically combines dividend discount models with EV/EBITDA multiples.

  In the risk and valuation discussion, the report discloses that UBS methodology typically averages valuation results derived from DDM and EV/EBITDA multiples for most midstream/MLP names.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• XOM

  Beneficiary of higher oil prices, with LNG asset operating disruption risk

  Strengths

  Each $1/bbl increase in oil prices contributes about $700 million in after-tax earnings; it has strong earnings leverage at higher oil prices and European natural gas prices.

  Weaknesses

  The Ras Laffan industrial complex was damaged, and XOM holds interests in 9 LNG trains, with Train 4 and Train 6 potentially offline for an extended period.

  Comparison

  Compared with Canadian oil sands producers, XOM has stronger oil price sensitivity but greater exposure to Middle Eastern LNG assets.

  Risks

  LNG facilities offline for 3 to 5 years, conflict escalation, and uncertainty around gas project recovery.

• CVX

  Beneficiary of higher oil prices, with Leviathan gas field shutdown risk

  Strengths

  Each $1/bbl increase in oil prices contributes about $600 million in after-tax earnings, or about $0.30/share.

  Weaknesses

  Its 39.66% interest in the Leviathan gas field was shut down for 33 days because of the conflict.

  Comparison

  Like XOM, it benefits from oil price upside, but its specific operational risk is concentrated in exposure to the Israeli gas field.

  Risks

  Renewed geopolitical conflict affecting field production, and a reversal in oil and gas prices.

• SU, CNQ, IMO, CVE

  Canadian oil sands beneficiaries

  Strengths

  Benefit from higher oil prices, and the report says they have not experienced direct operating disruptions related to the conflict.

  Weaknesses

  Oil sands assets are still affected by oil price cycles, costs, and downstream margin volatility.

  Comparison

  Compared with XOM and CVX, they face lower direct Middle East operating-disruption risk.

  Risks

  Oil price declines, changes in heavy-oil differentials, and volatility in downstream margins and inventory accounting.

• VLO, MPC, PSX, PBF

  Beneficiaries of U.S. refining crack spreads

  Strengths

  They are relatively less dependent on OPEC crude, and global product shortages and wider crack spreads support earnings; Canadian heavy oil can serve as a stable substitute feedstock source.

  Weaknesses

  Earnings depend on utilization rates, crude procurement costs, and margin capture.

  Comparison

  VLO and MPC have the highest pre-tax earnings sensitivity to each $1/bbl move in crack spreads, at about $837 million and $832 million, respectively.

  Risks

  Crack spreads narrowing after Hormuz reopens, inventory drawdowns, lower operating rates, and logistics disruptions to crude supply.

• DINO, DK

  Beneficiaries of a WTI discount versus Brent

  Strengths

  If a blockade causes WTI to trade at a discount to Brent, the related refiners may benefit from lower feedstock costs.

  Weaknesses

  Highly dependent on regional spreads and refinery configuration.

  Comparison

  The benefit is driven more by regional pricing differentials than by global crack spreads alone.

  Risks

  WTI-Brent spread narrowing and changes in regional supply chains.

• VG, LNG

  Beneficiaries of natural gas spreads and marketing margins

  Strengths

  A wider TTF-Henry Hub spread is most favorable for VG; each $1/MMBtu increase in marketing margin contributes about $600 million of EBITDA for VG and about $50 million for LNG.

  Weaknesses

  Dependent on cross-regional natural gas spreads and continued tightness in the LNG market.

  Comparison

  VG has much greater EBITDA sensitivity to marketing margin changes than LNG.

  Risks

  European gas prices easing, U.S. gas prices rising, and LNG logistics or regulatory constraints.

• PAA, TRGP, EPD, KNTK, ET, OKE

  Beneficiaries of Permian activity and midstream throughput

  Strengths

  Higher oil demand and Permian activity are favorable for PAA; improved Permian activity also benefits TRGP, EPD, KNTK, and ET; if WTI reaches $75-$80/bbl, OKE earnings could reach or exceed the high end of 2026 guidance.

  Weaknesses

  Midstream earnings are still constrained by contract structure, volumes, interest rates, and capital spending.

  Comparison

  PAA is more directly tied to oil activity, while TRGP, EPD, KNTK, and ET have greater exposure to natural gas liquids and midstream infrastructure.

  Risks

  Oil price declines, weaker-than-expected Permian activity, higher interest rates, and regulatory and environmental risks.

Key data

• Report date2026-04-13Published by UBS Global Research; the final timestamp is recommended as 2026-04-13 06:55 AM GMT.
• CVX oil price sensitivityEach $1/bbl increase in oil prices adds about $600 million in after-tax earnings, or about $0.30/shareEstimate from the report for CVX.
• XOM oil price sensitivityEach $1/bbl increase in oil prices adds about $700 million in after-tax earnings, or about $0.17/shareEstimate from the report for XOM.
• Leviathan gas field impactOperations resumed in early April 2026 after a 33-day shutdownCVX holds a 39.66% interest in the Leviathan gas field.
• Ras Laffan LNG impactAll 14 LNG trains were offline; XOM holds interests in 9 of themTrain 4 and Train 6 could be offline for 3 to 5 years, and XOM holds approximately 34% and roughly 30% interests, respectively.
• NYMEX diesel crack spreadUp about 9.4%The report says diesel crack spreads moved higher after the news.
• VLO refining crack spread sensitivityEach $1/bbl increase in global refining crack spreads adds about $837 million in pre-tax earningsAssumes 95% utilization and an 80% margin capture rate.
• MPC refining crack spread sensitivityEach $1/bbl increase in global refining crack spreads adds about $832 million in pre-tax earningsEstimate from the report.
• PSX refining crack spread sensitivityEach $1/bbl increase in global refining crack spreads adds about $553 million in pre-tax earningsEstimate from the report.
• PBF refining crack spread sensitivityEach $1/bbl increase in global refining crack spreads adds about $253 million in pre-tax earningsEstimate from the report.
• VG marketing margin sensitivityEach $1/MMBtu increase in marketing margin adds about $600 million in EBITDAA wider TTF-Henry Hub spread is most favorable for VG.
• LNG marketing margin sensitivityEach $1/MMBtu increase in marketing margin adds about $50 million in EBITDAEstimate from the report for LNG.
• OKE 2026 guidance assumptionBased on WTI at $55-$60/bblIf oil prices are in the $75-$80/bbl range, earnings could reach the high end of guidance or exceed it.

Impact & implications

From an investment perspective, a blockade related to the Strait of Hormuz would raise the geopolitical risk premium on energy assets and extend earnings sensitivity from upstream oil exposure to refining crack spreads, Canadian heavy oil substitution demand, Permian activity, and midstream natural gas marketing spreads. The most direct beneficiaries include Canadian oil sands producers that are not directly disrupted by the conflict, complex U.S. refiners that are less dependent on OPEC and can use Canadian heavy oil, and midstream companies supported by stronger Permian activity and widening gas price spreads; meanwhile, oil majors with Middle Eastern or Israeli gas assets need to discount operating disruption risk.

Risks

• If the Strait of Hormuz reopens quickly, expectations for tightness in crude oil, European natural gas, and refined products may ease.
• Further conflict escalation could cause additional operating disruptions at Ras Laffan LNG, the Leviathan gas field, or other regional energy assets.
• Refiners face crack spread compression, inventory drawdowns, lower utilization, and uncertainty around crude supply logistics.
• Midstream and MLPs face sharp commodity price declines, interest rate risk, leverage, environmental, and regulatory risks.
• The report discloses that different assumptions could lead to material differences in valuation and investment conclusions.

What to watch

• Whether U.S. blockade measures are carried out as planned and whether they expand to a broader range of Hormuz shipping lanes.
• Progress in talks between Washington and Tehran, and whether limited military strikes on Iran are resumed.
• Changes in crude oil prices, the European TTF-Henry Hub spread, the NYMEX diesel crack spread, and the WTI-Brent spread.
• The recovery progress of Ras Laffan LNG trains and the Leviathan gas field.
• U.S. refinery utilization rates, global refined product inventories, Canadian heavy oil flows, and Permian drilling activity.
• Whether OKE raises guidance or exceeds the 2026 high end under a WTI $75-$80/bbl scenario.