Exxon Stock (XOM) Bull Case Holds despite the Hormuz Ceasefire Relief

Exxon Mobil (XOM) stock appears to maintain a strong bullish case despite recent relief from the Strait of Hormuz ceasefire. The mood around oil has brightened a touch. Some tankers are now moving through the strait again, and markets celebrated the news with a strong rally on April 8.

However, that sigh of relief feels a bit too neat. Shipping through Hormuz remains severely impaired, insurers remain jumpy, and any return to normal will take time. In that setting, I remain bullish on Exxon Mobil today, especially as the world is being reminded again that secure barrels deserve a premium.

The Guyana Engine

Before we get into why Exxon still looks like a strong choice despite the recent fragile truce, let me first offer some context on why the company remains compelling today. Essentially, for a long time, one of the main arguments against Big Oil was that prospects for meaningful growth were gone, and the largest players were slowly running out of their best assets. Exxon has pushed back pretty hard, especially given what it has done in Guyana. Production there has grown so quickly that it has become one of the company’s most important growth engines.

It is not only about producing more oil. Where that oil is coming from matters too. Output from the Stabroek Block provides Exxon with a major source of supply outside the Middle East, which is important at this time, given ongoing geopolitical risk and global shipping chokepoints. Coupled with this offshore dominance is the sheer scale of the Permian Basin, where the Pioneer Natural Resources acquisition has finally hit its full stride.

As Exxon folds Pioneer’s acreage into its portfolio, it is strengthening an already dominant position in West Texas. What that really gives the company is a bigger, more efficient base of low-cost production that can be developed quickly and at scale. The Permian’s short-cycle nature also gives Exxon more room to respond when market conditions shift, which is an advantage producers tied to slower, more politically constrained mandates do not have.

A Shaky Truce and the Western Hedge

Now, the market may be reacting positively to the reopening of the Strait of Hormuz, but a short ceasefire does not erase the bigger issue. Tensions in the region have built up over the years, and no one should assume the risk has suddenly disappeared just because things have calmed down for a couple of weeks. That really matters for the oil market. Even if flows improve in the near term, the risk associated with Middle East shipping routes remains part of the picture, which likely keeps some pressure on transport and insurance costs.

That is a big reason Exxon’s asset base in the Western Hemisphere should prove valuable. It provides the company with exposure to production growth in politically and logistically safer locations than some traditional chokepoints. That advantage is not just about the quality of the resource base. It is also about where that production sits and how easily it can move through the company’s broader network. If another disruption hits the global energy market, supply from politically safer regions will probably become even more valuable.

Exxon already has significant exposure to that. Between its Gulf Coast refining system and its growing production in places like Guyana, the company is more insulated than some rivals that are more exposed to overseas bottlenecks and geopolitical risk. Note that this did not happen by accident. Exxon has spent years building a footprint that gives it greater control over both production and processing, and that strategy is finally paying off.

Pricing the Premium in a Dangerous World

The biggest concern, obviously, is the valuation. Exxon is up about 61% over the past year, so it is fair to wonder how much upside remains. At about 21x 2026 expected earnings per share (EPS) of $7.4, the stock is trading above the multiple oil majors have typically commanded. Hence, by normal standards, it does look somewhat expensive. Yet I think a premium is justified, as energy assets have become strategic assets again.

A lot of the old valuation logic does not fit this market very well. Oil supply is not just about how much exists. It is also about where it is coming from and whether it can actually move without disruption. The latest crisis made that pretty obvious. Even once a ceasefire is announced, the effects do not end immediately. Delays, damaged facilities, and the time needed to get shipments moving normally again can continue to affect the market well after the initial shock.

Also, analysts may still be underestimating Exxon to some extent. If security issues keep oil, freight, or insurance costs elevated, Exxon could earn more than current forecasts suggest. Management has already said that higher oil prices help upstream results. Hedging may blur the numbers in the short term, but the benefit remains. The stock is up a lot, so that part is not in dispute. The real question is whether earnings expectations have kept up. I am not sure they have.

Is XOM Stock a Buy, Sell, or Hold?

Despite the stock’s extended rally over the past year, Exxon Mobil maintains a Moderate Buy consensus rating on Wall Street, based on 13 Buy, seven Hold, and one Sell ratings. In addition, XOM’s average price target of $164.71 implies about 6% upside over the next 12 months, suggesting the stock might not be as pricey as its recent performance might suggest.

Conclusion

The Strait of Hormuz situation has calmed down for now. This is obviously a positive after the volatility we just saw. Still, that does not really change the broader setup for Exxon. The company has spent years building up production in the Western Hemisphere, and that looks a lot more valuable in a market where supply security carries more weight. With Guyana growing and the Permian still a major source of strength, Exxon remains in a strong position. That is why some investors are still comfortable with the stock, even at a valuation that looks full.