Veteran economist recommends loading up on fossil fuel investments as Mideast truce deadline looms.

Table of Contents Ed Yardeni, the well-known founder of Yardeni Research, has shifted his stance on S&P 500 Energy stocks to overweight for the first time since 2024. His strategic pivot came this week following a significant sector decline sparked by investor enthusiasm over a potential resolution to the Iran conflict. “We are inclined to use the recent selloff to overweight the sector,” Yardeni stated in his Monday research note. The Energy Select Sector SPDR Fund dominated S&P 500 sector performance throughout much of 2026. As of March 27, the fund had surged more than 40% year-to-date, fueled by crude oil prices exceeding $100 per barrel. The landscape shifted dramatically on April 7 when President Trump revealed a two-week ceasefire agreement. The fund subsequently tumbled approximately 10%, transforming it into the poorest-performing sector during this timeframe. Meanwhile, all other sectors either held steady or posted gains. Despite this recent weakness, the energy fund maintains a robust 25% gain for the year, continuing to outpace all 11 S&P 500 sectors. The foundation of Yardeni’s investment thesis rests on his conviction that oil prices won’t retreat to pre-conflict levels, regardless of how the situation resolves. His forecast places Brent crude in a $75 to $95 per barrel range moving forward, substantially above the earlier $55 to $75 band. His reasoning centers on two critical factors. First, significant physical destruction to energy infrastructure surrounding the Arabian Gulf region. Second, permanent shifts in maritime insurance pricing and shipper confidence when navigating the Strait of Hormuz. Yardeni argues that supply chain disruptions will persist with a “long tail” effect, even with complete reopening of the Strait. Bank of America’s commodities analysts forecast Brent averaging $93 per barrel throughout 2026, hitting a peak of $103 during the second quarter before declining toward $78 in 2027. The bank calculates the global oil market is experiencing a 4-million-barrel-per-day supply shortfall in Q2. Goldman Sachs projects Brent will trade within an $80–$90 range under comparable conditions. Energy stocks currently command a valuation of approximately 16 times forward earnings. By comparison, the broader S&P 500 index trades at roughly 23.9 times, while the Technology sector fetches around 30 times forward earnings. Yardeni further observes that Energy represents merely 3.3% of S&P 500 market capitalization, making it straightforward for investors to establish an overweight position. He suggests allocating between 5% and 10% to the sector. Oil and gas equipment and services firms are identified as particularly attractive, offering maximum leverage to potential large-scale infrastructure reconstruction projects. Numerous energy companies also provide compelling dividend yields. The temporary truce between the United States and Iran is slated to expire on April 22. Iranian officials have indicated they will not engage in further negotiations unless the United States dismantles its blockade of Iranian ports. Yardeni noted that overweighting Energy stocks “might be a good hedge against a resumption of the war.” Discover top-performing stocks in AI, Crypto, and Technology with expert analysis.