After the Windfall

Research evidence excerpt

After the Windfall

FICC Research

Credit Research

18 June 2026

Energy

Although uncertainties remain at the beginning of a 60-day

negotiation period, energy markets have quickly priced in a

reopening of the Strait of Hormuz; spreads have yet to Harry Mateer +1 212 412 7903

respond in a meaningful way. We adjust our sector ratings harry.mateer@barclays.com

accordingly. BCI, US

Irene Zhang

+1 212 526 6051

Energy markets appear to be entering a more two-sided phase following the Iran conflict-driven yiran.zhang@barclays.com

volatility. While oil prices continue to reflect supportive near-term fundamentals, including BCI, US

ongoing inventory draws and a geopolitical risk premium that could prove more durable, the

reaction function to supply shocks has been more muted than expected, in part due to rapid

demand adjustments from key buyers, such as China. Moreover, Barclays' current estimates call

for a significant oil surplus emerging again in 2027, predicated on the Strait of Hormuz

remaining open. This suggests that the market may begin to discount some of the upside risk

associated with future disruptions.

At the same time, spreads across energy credit remain near historically tight levels, with several

subsectors offering little buffer against a moderation in commodity prices or a shift in

sentiment. While fundamentals remain constructive through 2026, the forward curve and

emerging expectations for a potential 2027 surplus introduce a less supportive medium-term

backdrop. In this context, we see increasing dispersion and favor a more tactical, credit-

selective approach across the sector.

FIGURE 1. Summary of Sector Ratings

More Vulnerable Sector Sector Rating Less Vulnerable Tickers Tickers