US Energy Sector Rallies Against Market: Soaring Oil Prices and Policy Dividends
July 28, 2026, New York — Despite mixed performance in the three major US indices today, the S&P 500 energy sector led the market with a gain of over 2%, becoming the most eye-catching focus. At the close, the S&P 500 Energy Index rose 2.3%, with Exxon Mobil up 2.8%, Chevron up 2.5%, and ConocoPhillips gaining 3.1%. The strong performance of energy stocks was driven by a dual boost: international oil prices breaking through the $90 per barrel mark and the release of final rules for the US federal government's latest clean energy subsidy policy.
Oil Breaks $90: Supply Tightness as Main Driver
WTI crude oil futures for September delivery on the New York Mercantile Exchange hit an intraday high of $91.2 per barrel, the highest since October 2025, before closing at $90.8, up 1.7%. Brent crude also rose to $93.5. Analysts note that the core driver of this oil price surge is supply-side tightening: OPEC+ decided to extend production cuts through year-end at its early July meeting, while US shale oil production growth has been hampered by tighter environmental regulations. Meanwhile, the end of global refinery maintenance and peak summer travel demand have driven a strong rebound in demand. Latest data from the US Energy Information Administration (EIA) shows US crude inventories have fallen for five consecutive weeks to a four-year low. Bob Yawger, head of energy futures at Mizuho Securities, said: “The market is reassessing the supply-demand balance. The supply gap is hard to fill in the short term, and oil prices are likely to remain high.” Additionally, geopolitical factors cannot be ignored: Iranian nuclear talks are deadlocked again, and tensions in the Middle East have escalated, adding a risk premium to oil prices.
Clean Energy Subsidy Rules Finalized: Traditional Energy Firms Boosted in Transition
Beyond the oil price boost, the US Department of Energy today released the implementation rules for clean energy subsidies under the Inflation Reduction Act, clarifying tax credit standards for carbon capture, hydrogen production, and renewable energy projects. Notably, for the first time, the rules include traditional oil and gas companies in the subsidy scope, allowing them to carry out carbon capture and storage (CCS) projects on existing oil and gas fields to apply for tax credits of up to $85 per ton. This policy directly benefits large integrated energy companies like Exxon Mobil and Chevron, as they have mature operational experience and abundant oil and gas resources to deploy CCS facilities quickly. Devon McDermott, energy analyst at Morgan Stanley, noted: “This essentially opens a ‘green’ monetization channel for traditional energy companies, aligning with the ESG investment trend while maintaining core oil and gas operations—a win-win.” Stimulated by this news, Chevron hit a 52-week high intraday, while stocks of startups focused on carbon capture technology also rallied.
Sector Rotation and Market Sentiment: Demand for Defensive Allocation Rises
From a macro perspective, the rise of energy stocks also reflects sector rotation in market funds. Ahead of the Fed's July rate-setting meeting (scheduled for July 29-30), investor concerns over the interest rate outlook weighed on tech stocks, while defensive sectors such as energy and utilities attracted fund inflows thanks to high dividends and price hike expectations. Additionally, the US July manufacturing PMI preliminarily fell to 48.9, contracting for the third consecutive month, raising concerns of an economic slowdown and further reinforcing market preference for inelastic demand industries like energy. Sam Stovall, chief investment strategist at CFRA Research, said: “Historically, the energy sector has performed well during economic slowdowns because the base of energy consumption remains solid regardless of the economic cycle. The current combination of rising oil prices and policy dividends provides a unique dual support for energy stocks.”
Outlook: Focus on OPEC+ Moves and Corporate Earnings
Looking ahead to the next week, investors need to closely monitor whether OPEC+ will hold an emergency meeting in early August to discuss production policy, as well as the Q2 earnings reports of several major US energy companies (including Exxon Mobil and Chevron) due this Friday. The market expects energy companies' Q2 earnings to grow about 15% year-over-year, mainly driven by higher oil prices and refining margins. If earnings beat expectations, it could further ignite the energy sector. However, potential risks should also be watched: if the Fed unexpectedly sends a hawkish signal, a strong dollar could weigh on dollar-denominated commodity prices, putting pressure on energy stocks. Overall, against the backdrop of tight supply-demand and policy support, the short-term strength of the US energy sector is likely to continue and become one of the key market themes in the second half of the year.
