Rich Duprey
5 min read
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Delta Air Lines (DAL) reported Q1 revenue of $14.2B with fuel costs up $332M year-over-year, and now forecasts Q2 adjusted earnings of $1.00 to $1.50 per share below consensus after expecting $2B in additional fuel expense. Dow (DOW) posted 2025 net sales of $40B but saw operating EBIT decline $461M year-over-year as elevated oil prices squeezed feedstock costs that chemical producers cannot fully pass along. Frontline (FRO), a tanker operator, benefits as rate surges from shipping disruptions around the Strait of Hormuz offset higher commodity prices.
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Trump’s energy production surge is fading as U.S. crude output declines in 2026 while geopolitical tensions in the Middle East push Brent crude toward $115 per barrel, erasing the cost relief that had supported corporate margins and broad stock valuations.
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The analyst who called NVIDIA in 2010 just named his top 10 AI stocks. Get them here FREE.
Investors have experienced the market’s recent choppiness and are growing concerned the easy gains from low energy costs are evaporating. President Trump’s “drill baby drill” agenda delivered record U.S. crude oil production of 13.6 million barrels per day in 2025, up 3% or 350,000 barrels per day from 2024, according to the U.S. Energy Information Administration. That surge was supposed to keep commodity prices in check and give corporate margins room to breathe.
Yet Brent crude averaged $103 per barrel in March and is forecast to peak at $115 per barrel in the second quarter before easing. The tailwind that lifted broad stock valuations is fading faster than expected. Let’s break down why this shift matters for your portfolio right now.
Trump’s second-term energy policies focused on regulatory certainty and expanded federal leasing. The Interior Dept. highlighted record offshore oil output of over 714 million barrels in 2025, letting investors price in lower input costs across sectors — from airlines to chemicals to manufacturing. Lower energy expenses translate directly to higher free cash flow and better earnings.
READ: The analyst who called NVIDIA in 2010 just named his top 10 AI stocks
For years, energy costs acted like a silent profit booster. When they stayed tame, companies could expand margins without raising prices aggressively. That dynamic helped the S&P 500 deliver steady returns even when other growth drivers slowed. Simply put, cheap energy was the market’s biggest, most reliable tailwind.
While production hit records last year, the EIA now forecasts U.S. crude output will dip slightly to 13.5 million barrels per day in 2026 — about 100,000 barrels per day less than 2025. Geopolitical flare-ups in the Middle East, especially the Iran war, widened the Brent-West Texas Intermediate (WTI) spread to an average $12 per barrel in March and as high as $25 per barrel at one point. Jet fuel prices jumped from roughly $2.50 per gallon before February to an expected $4.30 per gallon in the June quarter.
