Market Commentary: History May Not Repeat Itself, but It Rhymes

“History may not repeat itself, but it rhymes” – Mark Twain

Today’s energy shock echoes Russia’s invasion of Ukraine in 2022 when energy equities were clear beneficiaries. In 2022, the Energy Sector returned +65.7% (as measured by the S&P 500 Energy Index) vs. -18.1% for the S&P 500. Over the 3 years to follow the Energy Sector underperformed While it still posted respectable annual returns of 12.9% (with dividends reinvested), this still fell well short of the S&P 500’s stronger 19.4% annual return. Year-to-date, the Energy Sector is up ~32% vs -5% for the S&P 500.

Total Return Since 2022

 Source: S&P Global

However, today’s macro backdrop differs meaningfully from the period leading into 2022. At that time, global oil and natural gas inventories were historically low, a post-pandemic demand surge and fiscal stimulus stoked inflation, prompting the Fed to begin raising interest rates. An inverted yield curve was signaling that a recession was on the horizon, although it never materialized.

The U.S. economy remains strong, oil production had been outpacing demand, inflation was trending toward the Fed’s 2% target, and expectations continued for interest rate cuts. That said, the Iran war could prove more acute. The International Energy Agency (IEA) has described this as the "largest supply disruption in the history of the global oil market." Roughly 20% of global crude oil, refined products, and LNG flows through the Strait of Hormuz.

Events in the Middle East are very fluid. This morning President Trump suggested that an agreement with Iran may be imminent. As a result, oil prices are plummeting and the stock market is surging. Although we hope this is the case, "it ain't over till it's over."

Disruption in Key Persian Gulf Energy Infrastructure

Source: AP reporting; Graphic: Will Jarrett

Efforts to mitigate the loss of supply —such as the plan by IEA member countries to release ~400 million barrels from strategic petroleum reserves over 4 months and Saudi Arabia’s attempt to redirect ~4–5 million barrels per day (MMb/d) of production—are unlikely to completely offset the loss of supply.

According to the IEA, Gulf countries have reduced oil production by at least 10 million MMb/d because their storage is already reaching its limit while more than 3 million MMb/d of refining capacity have shut down due to attacks and lack of via export outlets. As shown in the chart below, prices of refined petroleum products have increased more than those of crude oil.

Refined Petroleum Product Prices

Note: Prices as of 2/27/26 for start of war and 3/16/26 for current period. Source: EIA

In a sign of desperation, Iran has begun targeting attacking infrastructure in neighboring countries, with a notably damaging attack on most Qatar’s LNG hub at Ras Laffan. The missile attack on March 18^th was an apparent response to Israeli airstrikes on Iranian gas and oil installations linked to the South Pars natural gas field, the Iranian half of the world’s largest gas field shared with Qatar.

Ras Laffan lost two LNG trains that accounted for approximately 17% of its production or 12.8 million tons per annum (mtpa). This sent the Dutch TTF price up ~13% to $20.67/MMBtu, still well below the highs of 2022, but high, nevertheless.

With U.S. Henry Hub prices remaining subdued (~$3/MMBtu), LNG margins for U.S. producers have expanded sharply to ~$17/MMBtu (from ~$8/MMBtu at the start of the war). Shares of U.S. LNG company beneficiaries (Cheniere, Next Decade, and Venture Global) surged on the news, up ~12%, ~23%, and ~22%, respectively since 3/17/26 close.

Venture Global will realize the greatest windfall because it has the most production that is sold into the spot market while Cheniere has approximately 95% of its volumes committed under long term contracts. In our view, the stocks may have appreciated too much too fast despite incrementally positive implications, including:

1.      Qatar expects facility repairs to take 3 to 5 years. Additionally, plans to expand its capacity from ~77 mtpa of LNG to 142 mtpa in stages through 2030 will likely be delayed

2.      Concerns that global LNG export capacity expansions (U.S., Qatar, Canada, et al) would outpace demand by 2027-2028 have been somewhat alleviated.

3.      The U.S. and Canada may attract increased interest as reliable energy suppliers.

TTF and HHub Prompt Prices ($/mmbtu)

Source: USCA and Bloomberg

OUR STANCE:

Energy was the best-performing S&P 500 sector even before the start of the Mideast conflict on February 28th. This can possibly be explained by a reversion to the mean, in which the worst-performing sectors in the prior year become among the best sectors the following year.

Other explanations include a rotation in the stock market from growth stocks, such as technology, into value and cyclical stocks that trade at more attractive valuations such as energy.

At the start of the year, the energy sector’s representation in the S&P 500 was just 2.8%, very close to the bottom of its historic range, while the ten largest stocks accounted for about 40% of the market’s total value. Portfolio managers have an incentive to diversify into under-owned sectors such as energy.

Since the start of the Iran war, Brent and WTI prices have gyrated and as of this writing are up ~54% and ~47%, respectively, as of 3/20/26. Dutch TTF natural gas prices are up ~86% (now trading at ~$20.435/MMBtu), while the energy sector has posted a ~32% price return year-to-date—notably outperforming the ~5.0% decline in the S&P 500.

Cushing, OK WTI Spot Price FOB ($per Bbl) 

Source: Energy Information Administration (EIA)

We believe the risk to commodity prices is skewed higher the longer the war persists. However, we would be measured in adding to energy portfolios in the short term because of the likely knee-jerk sell-off upon resolution of the war but believe that energy prices will most likely settle higher than pre-war prices. This is because of the war-inflicted damage to infrastructure and a risk premium that will be embedded in prices. 

The immediate beneficiaries are upstream and refiners that have commodity price exposure. Our midstream companies are poised to benefit longer term should their upstream customers believe that oil and gas prices will settle higher post-war and increase production. Additionally, there may be increased demand for U.S. exports as foreign buyers look to further diversify supply.

REASONS TO BE BULLISH LONGER TERM ON ENERGY

 1.      Energy security is national security. World economies are dependent on available and affordable energy to ensure their populations have a decent quality of life. As we have seen, countries can and will weaponize energy to meet their strategic aims. The U.S. has pursued an “energy dominance” policy under the Trump administration that has made the country less vulnerable to an energy shock and perhaps emboldened its geopolitical initiatives.

2.      The narrative is changing. Investing is such a humbling business as narratives can change very quickly—the prevailing narrative of the "demise of fossil fuels" has been debunked. The narrative suggesting peak oil consumption would occur by the end of this decade has been pushed out several decades. We often forget that oil is more than just a transportation fuel. It is the essential feedstock for the petrochemicals that make our medicines, the asphalt for our roads, and the synthetic fibers in the clothes we wear. It is the literal building block of modern civilization. Higher consumption will be driven by growing economies and population growth. More importantly, there is a moral and strategic imperative: energy is the only proven way to move undeveloped countries out of "energy poverty". As these nations industrialize, their demand for reliable, affordable, and clean energy will provide a boost to global consumption.

3.      The business model has improved. Companies in the energy sector have successfully pivoted to a fiscally disciplined model focused on return on capital and generating cash for shareholders via dividends and buybacks. Balance sheets are the best I’ve ever seen in my career. Unlike the past, upstream companies have been reluctant to alter drilling expenditures in response to temporary price moves. This lower risk model has been rewarded with higher stock market returns.

4.      Energy sector’s representation in the S&P 500 poised to increase. Given the recognition of how important energy is, we expect the sector’s representation in the S&P 500 to increase over time from its current percentage of 3.9%.

OUR STANCE:

The value proposition is average dividend yields of ~5% plus 5%+ dividend growth. Natural gas is the big winner. Demand is pegged to grow by over 27 Bcf/d (or 25%) by 2030 from a combination of LNG exports, power demand to meet the growing appetite of data centers, and industrial onshoring.

However, as Williams Companies, Inc. (NYSE: WMB) has pointed out, pipeline and storage infrastructure has not kept up with demand growth. Permit reform is a prerequisite to ensure infrastructure is constructed to meet this projected growth and to ensure the U.S. wins the AI race!

FIRESIDE CHAT RECAPS

To watch replays of the Fireside chats discussed below, please click here.

David Slater: Executive Chairman and CEO of DT Midstream Inc.

We hosted a fireside chat on March 18^th with David Slater of DT Midstream, Inc. (NYSE: DTM). Our discussion centered on the economic forecast for natural gas (e.g., LNG and power demand); DTM’s strategically located and integrated natural gas assets in the Haynesville, Appalachia and Midwest; and the sizeable increase in its project backlog—primarily pipeline investments.

Willie Chiang: Chairman, CEO, and President of Plains All American

We also hosted a fireside chat back on February 26^th with Willie Chiang of Plains All American Pipeline, L.P. (Nasdaq: PAA) and Plains GP Holdings (Nasdaq: PAGP). Our conversation covered the macro-outlook for crude oil and Plains’ premiere Permian Basin crude oil pipelines and gathering assets. Spoiler alert: This webinar took place before the Iran War, which as previously noted caused a spike in crude oil prices and stimulated production levels. As a crude gatherer and pipeline operator, Plains will benefit from higher production levels.  PAA and PAGP are up ~4% and ~5% since the start of the Iran War on 2/28/26.

FEBRUARY REVIEW: ENERGY CONTINUES STRONG RALLY

The rundown:

• In February, SAM’s Infrastructure Income Portfolio produced a return (net of fees) of 9.5% compared to   -0.8% for the S&P 500 and 7.7% for its customized benchmark. The performance relative to benchmark reflect our overweight in midstream and lower weights in the utilities and clean energy sectors.

  
  

• In February, SAM’s Energy Transition Portfolio generated a return (net of fees) of 9.9% vs 4.8% for its customized benchmark.

• SAM’s portfolios are more heavily weighted in Midstream, which outperformed relative to the clean energy sector but slightly underperformed relative to utilities in February.

• Midstream outperformed the overall market and was up in February with a total return of 9.5% as measured by the AMNAX.

• In February, clean energy sector outperformed the overall market, generating a total return of 0.1% as measured by the S&P Global Clean Energy Index (SPGTCLTR). For the month, utilities outperformed the market with a total return of 9.9% as measured by the Philadelphia Stock Exchange Utility Index (XUTY).

• Sector performance in the S&P 500 was largely positive with seven out of eleven sectors posting positive performance. Utilities was the best performer and Consumer Discretionary was the worst. Energy delivered a 9.4% monthly total return. February month-end WTI crude oil and Henry Hub natural gas prices were $66.96 Bbl and $2.99 per MMBtu, up ~4% and down ~58%, respectively from last month.

YTD 2026 Total Return

Source: Bloomberg, NASDAQ and S&P Global

RESULTS: SINCE INCEPTION & ONE YEAR

SAM’s Infrastructure Income Portfolio produced a return (net of fees) of 184.7% and 17.3% for the periods since 11/10/20 inception and 1-year, respectively. This compares to a total return of 175.3% and 31.4%, respectively, for its customized benchmark and 109.7% and 18.9%, respectively, for the S&P 500 as of 2/27/26.

SAM’s Energy Transition Portfolio generated a return (net of fees) of 51.8% and 24.3% for the periods since 4/29/21 inception and 1-year, respectively. This compares to a total return of 59.5% and 44.27%, respectively, for its customized benchmark and 75.3% and 18.9%, respectively, for the S&P 500 as of 2/27/25.

Sam Partners’ Infrastructure Income and Energy Transition Strategies seek to provide sustainable income and growth with capital preservation. This is accomplished by investing in a concentrated portfolio of high-quality midstream energy companies, utilities and clean energy companies that are well positioned to participate in the energy transition to a net zero carbon future. A diversified approach to investments across these sectors should optimize risk-adjusted returns, in our view. Our Infrastructure Income Strategy offers investors a current yield of ~4.0% and growth potential of ~5-7%; while the Energy Transition Strategy that is more heavily weighted with clean energy stocks and aligns with favorable ESG ratings, offers investors a current yield of ~3.0%. In a world searching for yield, we believe these Strategies offer a compelling value proposition.

IMPORTANT DISCLOSURES

Siegel Asset Management Partners is a registered investment advisor located in Plainview, New York. The views expressed are those of Siegel Asset Management Partners and are not intended as investment advice or recommendation. This material is presented solely for informational purposes, and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment or strategy is suitable for a particular investor. Information is obtained from sources deemed reliable, but there is no representation or warranty as to its accuracy, completeness, or reliability. All information is current as of the date of this material and is subject to change without notice. Third-party economic, market or security estimates or forecasts discussed herein may or may not be realized and no opinion or representation is being given regarding such estimates or forecasts. Certain products and services may not be available in all jurisdictions or to all client types. Unless otherwise indicated, Siegel Asset Management Partners' returns reflect reinvestment of dividends and distributions. Indexes are unmanaged and are not available for direct investment. Investing entails risks, including possible loss of principal. Past performance is no guarantee of future results.