TotalEnergies Shares Hit Record Peak Amid Middle East Production Halt

Despite being forced to make significant operational cuts due to escalating Middle East tensions, TotalEnergies SE has seen its stock price surge to unprecedented levels. The energy giant has taken approximately 15 percent of its global production offline as rocket and drone attacks increasingly threaten infrastructure in the Gulf region. Contrary to expectations of a sell-off, the market has propelled the company’s shares to new highs.

Soaring Crude Prices Offset Lost Output

The company confirmed this past Friday the deliberate shutdown of facilities in Qatar and Iraq, alongside offshore platforms in the United Arab Emirates. This move is costing the conglomerate roughly ten percent of its total upstream cash flow. However, a straightforward mathematical dynamic is at play. Company calculations indicate that an increase in the Brent crude price of just eight dollars per barrel—from a base of $60—would entirely offset these losses. With Brent currently trading around $104, the elevated price environment is more than compensating for the reduced production volumes.

This substantial price rally is being driven by the effective closure of the strategically vital Strait of Hormuz. Instead of the usual 150 vessels, only six to seven ships are currently transiting this chokepoint daily, which normally handles one-fifth of the world’s oil supply. The market is rewarding the gushing profits from the company’s remaining production sites. At Friday’s close, the stock reached a precise new 52-week high of €72.05. Since the start of the year, the share price has registered a notable gain of 27.57 percent.

Should investors sell immediately? Or is it worth buying TotalEnergies SE?

North African Capacity Comes Online

Away from the Middle Eastern crisis zone, TotalEnergies is simultaneously bringing new capacity online in North Africa. Following a ten-year shutdown, production has resumed at the Mabruk oil field in Libya. The facility, in which TotalEnergies holds a 37.5 percent stake, is adding up to 30,000 barrels per day of total capacity to the market.

For now, as the geopolitical risk premium keeps oil prices anchored above $100 per barrel and European foreign ministers only begin discussions this Monday about potential military protection missions for commercial vessels, the financial benefits of the crisis for the corporation are clearly outweighing the regional operational constraints.