Chevron Rides Hormuz Squeeze as Brent Crude Holds Near $94
Chevron's stock rose slightly on Friday morning as Brent crude prices remained near $94 per barrel. This uptick in oil prices is due to ongoing tensions between Iran and Washington, which are squeezing Hormuz shipping. The Hormuz chokepoint is a critical waterway for global oil trade.
Chevron is well-positioned to benefit from high oil prices, having reported second-quarter earnings of $12.1 billion with worldwide production increasing by 20%. Operating cash flow excluding working-capital swings reached $19.7 billion, while adjusted free cash flow climbed to a substantial $15.4 billion.
However, Chevron's valuation is a concern, trading at a premium of 29.74% above its GF Value estimate of $158.65. This significant premium may disappear if the oil market cools down due to diplomatic efforts.