Piper Warning: The risk of a sharp drop in oil prices may be comparable to the magnitude of the surge

LootboxPhobia · 2026-03-10T00:24:31+00:00

Despite the recent sharp rise in WTI crude oil prices, U.S. oilfield services stocks have failed to gain momentum, and investor reactions have been lukewarm. Analysts point out that concerns about a potential pullback in oil prices, along with position factors and changes in capital discipline, are the main reasons. Companies related to the Middle East are significantly affected by the conflict, leading to a decline in their stock prices. It is expected that if WTI prices remain high, U.S. onshore stocks will outperform the broader market.

LootboxPhobia

2026-03-10 00:24:31

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Investing.com - Despite a sharp surge in crude oil prices, U.S. oilfield services stocks have not received their usual boost, and the current risk is that oil prices could decline just as sharply, Piper Sandler analyst Derek Podhaizer noted in a report on Monday.

Using InvestingPro to assess Wall Street’s outlook on the oil market

Podhaizer said that although WTI crude oil surged nearly 40% over the past week, investors “did not chase the rally.”

Instead, U.S. land service stocks “held steady or only rose modestly in the single digits,” with even Halliburton underperforming, down 5%, “roughly in line with the -6% performance of OIH.”

He pointed out two main reasons for the market’s muted reaction.

First, the analyst emphasized position sizing, noting that before the conflict erupted, OIH had already risen 40% year-to-date, with fracturing service providers, land drillers, and other U.S. land-related stocks all significantly up.

Second, the market remains skeptical about whether exploration and production companies will quickly ramp up activity, due to “new market dynamics in capital discipline among exploration and production firms” and “private operators, which are most sensitive to prices,” currently accounting for 45% of drilling rigs.

Podhaizer warned that, worryingly, “if the conflict resolves quickly, the pullback in oil prices could be just as sharp as the surge, leading to a significant vacuum period for related stocks.”

Meanwhile, as expected, companies with greater exposure to Middle Eastern operations suffered more severe declines. NESR fell 17%, while WFRD, SLB, WHD, and HP also declined, as conflict and the closure of the Strait of Hormuz increased risks, with production in Kuwait, Iraq, the UAE, and Qatar being restricted.

Although U.S. land stocks reacted modestly, Piper Sandler still expects that as long as WTI crude remains high, these stocks will outperform the broader market, while companies with significant Middle Eastern exposure will continue to lag.

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