Oil prices drop as Strait of Hormuz traffic normalizes; prices unlikely below $65/barrel through year-end.

Oil prices are falling following the resumption of ship traffic through the Strait of Hormuz, signaling a return to normal supply conditions. Despite this easing, sovereign petroleum reserves are depleted, which sets a structural floor for oil prices, making it unlikely for prices to fall below $65 per barrel through the end of the year. The author remains bullish on energy extractors like ExxonMobil (XOM) and BHP, midstream Master Limited Partnerships (MLPs), and views the UAE as a rising leader in post-OPEC oil production. Additionally, there is optimism about the S&P 500, with expectations of a significant rally by year-end as the market currently underprices earnings and overestimates risks related to oil supply disruptions.