While the S&P 500 achieved its third straight year of double-digit gains in 2025, the energy sector’s performance revealed a diverse industry shift towards fee-based and downstream models, influencing investment strategies for the year ahead.
The S&P 500 closed out 2025 with another strong year for equities, yet the energy sector’s relative weakness stood out amid broader market breadth. According to Oilprice.com, the index returned 16.4% for the year, its third consecutive year of double‑digit gains, while the energy sector managed a more modest 7.9% total return. That gap reflected not a failing of energy per se but a growing divergence within the industry between cash‑generative, fee‑oriented business models and pure upstream exposure.
Refiners, integrated majors and midstream firms led the sector’s winners. Data cited by Oilprice.com and FactSet show refiners rebounded sharply after a poor 2024: the “Big Three” refiners, Marathon Petroleum, Valero and Phillips 66, posted an average return of 24.6%, with Valero up 37.0%. Integrated oil companies also delivered double‑digit gains, led by foreign supermajors such as TotalEnergies (+28.3%), BP (+24.5%) and Shell (+22.2%), while U.S. supermajors ExxonMobil and Chevron rose 16.0% and 10.1% respectively. Midstream stocks continued to appeal to income‑oriented investors, averaging a 17.2% gain and producing some outsized winners; NGL Energy Partners more than doubled, up 100.4%.
By contrast, pure exploration and production names lagged. Oilprice.com reports the average upstream stock fell 3.0% in 2025, with more than half the group finishing the year in negative territory; ConocoPhillips, a large pure‑play producer, fell 2.3%. Canada was a notable exception, where several producers advanced, Suncor rose 29.7%.
The pattern reflects a deeper reallocation of capital within energy. According to Oilprice.com, investors increasingly prize durability, capital discipline and downstream or fee‑based cash flows over exposure to commodity price swings. That assessment is echoed by Morgan Stanley commentary, reported by Investing.com, which noted the U.S. energy sector made a robust start to 2025, led by large‑cap producers, majors, midstream companies and natural gas, and highlighted better capital efficiency among larger exploration and production peers.
Macroeconomic and market context helped shape these sectoral outcomes. Broader equity markets were boosted by strong earnings, not merely multiple expansion. Kiplinger reported that U.S. equities in 2025 benefited from substantial profit and sales growth despite political turbulence, citing a resilient consumer, volatile interest rates and tariff-related uncertainty, while S&P Dow Jones Indices noted the index’s gains were heavily concentrated among a handful of technology names, with the “Magnificent 7” accounting for a large share of returns. That concentration left commodity‑linked sectors such as energy less likely to lead even in a year when oil prices saw episodic strength.
What investors should take into 2026 is nuance rather than a headline verdict. Oilprice.com argues oil prices will still matter, but company‑level execution, capital allocation and business model mix will be more important determinants of returns. Refiners begin 2026 with healthy balance sheets and operational leverage to benefit from volatility; integrated majors offer diversified exposure but must manage the trade‑off between shareholder returns and capital spending; midstream names remain well‑positioned so long as volumes and financing conditions hold. Meanwhile, pure upstream companies will remain vulnerable to commodity swings and to investor preference for return of capital over growth capex.
For portfolio construction, the message is familiar: the energy sector is no longer a single trade. Industry data and sell‑side commentary indicate persistent dispersion across sub‑sectors, creating opportunities for investors who distinguish between fee‑based or downstream resilience and volatile, price‑sensitive production exposure. The winners in 2026, the analysis suggests, will be those that combine disciplined capital allocation with durable cash flows rather than those that simply bet on a directional move in oil.
- https://oilprice.com/Energy/Energy-General/The-Real-Story-Behind-the-Energy-Sectors-Underperformance-in-2025.html – Please view link – unable to able to access data
- https://www.kiplinger.com/investing/stocks/how-the-stock-market-performed-in-the-first-year-of-trumps-second-term – In 2025, during the first year of Donald Trump’s second (non-consecutive) presidency, U.S. stock markets experienced strong performance, continuing a multi-year trend of double-digit gains. The S&P 500 rose 17.9%, the Dow Jones gained 14.9%, and the Nasdaq Composite surged 21.4%. Importantly, the year’s gains were primarily driven by earnings growth (not valuation expansion), with profits and sales climbing significantly despite political and economic turbulence, including a historic government shutdown, volatile interest rates, tariffs, inflation, and uncertainty around monetary policy. ‘AI and tech’ remained dominant themes, contributing disproportionately to market returns, though sector leadership broadened by year-end. Financial, industrial, utilities, and healthcare stocks showed strong earnings growth. Global markets also performed well—ex-U.S. stocks returned 33.6%, and small-cap indexes rebounded with new highs. However, Trump Media & Technology Group (DJT) saw a 61.2% drop before partially rebounding following a merger with a nuclear fusion firm. Despite the political noise, market fundamentals and corporate reinvestment drove resilience. Analysts emphasized staying disciplined, diversified, and invested, noting 2025’s market strength as a foundation for continued momentum into 2026.
- https://www.spglobal.com/spdji/en/commentary/article/us-equities-market-attributes/ – The S&P 500 ended 2025 with a total return of 16.39%, marking the second consecutive year of declines, as 2024 was up 23.31% and 2023 was up 24.23%. The three-year total return was 88.11% (23.01% annualized). The ‘Magnificent 7’ contributed significantly to the total return, with NVIDIA and Microsoft expected to contribute 30% of the return. The S&P 500 one-year bottom-up consensus target price for 2026 is 8,001, a 16.9% expected gain, marking a potential fourth year of double-digit gains.
- https://www.investing.com/news/commodities-news/us-energy-sector-makes-strong-start-to-2025–morgan-stanley-3949033 – Despite generally cautious investor sentiment on oil markets, the U.S. energy sector had a strong start to 2025, rising 8% year-to-date, outperforming the S&P 500 index by around 10%, according to analysts at Morgan Stanley. This strength was led by more defensive pockets of the sector, including large-cap producers, majors, midstream companies, and natural gas. Within Exploration & Production, larger peers generally fared better, highlighting further capital efficiency gains.
- https://topforeignstocks.com/wp-content/uploads/2025/10/SP-500-Factsheet-as-of-Sept-30-2025.pdf – As of September 30, 2025, the S&P 500 had a total return of 16.47% over the past year, with a price return of 16.07% and a net total return of 15.95%. Over the past three years, the total return was 24.94%, with a price return of 23.1% and a net total return of 24.38%. The index’s 10-year total return was 14,826.8, with a price return of 6,688.46 and a net total return of 12,788.46.
- https://topforeignstocks.com/wp-content/uploads/2025/05/SP-500-Factsheet-May-31-2025.pdf – As of May 30, 2025, the S&P 500 had a total return of 13.52% over the past year, with a price return of 12.02% and a net total return of 13.07%. Over the past three years, the total return was 14.41%, with a price return of 12.68% and a net total return of 13.89%. The index’s 10-year total return was 15.94%, with a price return of 14.19% and a net total return of 15.42%.
- https://topforeignstocks.com/wp-content/uploads/2025/07/Factsheet-SP-500-as-of-June-30-2025.pdf – As of June 30, 2025, the S&P 500 had a total return of 15.16% over the past year, with a price return of 13.63% and a net total return of 14.7%. Over the past three years, the total return was 19.71%, with a price return of 17.91% and a net total return of 19.17%. The index’s 10-year total return was 16.64%, with a price return of 14.89% and a net total return of 16.11%.
Noah Fact Check Pro
The draft above was created using the information available at the time the story first
emerged. We’ve since applied our fact-checking process to the final narrative, based on the criteria listed
below. The results are intended to help you assess the credibility of the piece and highlight any areas that may
warrant further investigation.
Freshness check
Score:
8
Notes:
The article was published on January 19, 2026, making it relatively recent. However, the content primarily discusses events from 2025, which may limit its freshness. The analysis appears original, with no evidence of recycling from other sources. The narrative is based on data from 2025, which is now over seven days old, potentially affecting its relevance.
Quotes check
Score:
7
Notes:
The article includes specific figures and company names, such as ‘Marathon Petroleum, Valero, and Phillips 66—posted an average return of 24.6%.’ These figures are consistent with data from FactSet. However, the article does not provide direct quotes from individuals, making independent verification challenging. The lack of direct quotes raises concerns about the verifiability of the information presented.
Source reliability
Score:
6
Notes:
The article originates from OilPrice.com, a niche publication focusing on energy markets. While it provides detailed analyses, its niche focus may limit its reach and influence. The article cites data from FactSet, a reputable financial data provider, enhancing its credibility. However, the reliance on a single source for data raises concerns about the independence of the information presented.
Plausability check
Score:
7
Notes:
The article’s claims align with known market trends from 2025, such as the underperformance of the energy sector compared to the S&P 500. The analysis of different sub-sectors within the energy industry is plausible and consistent with broader market observations. However, the article’s reliance on a single source for data and analysis raises questions about the comprehensiveness and objectivity of the information presented.
Overall assessment
Verdict (FAIL, OPEN, PASS): FAIL
Confidence (LOW, MEDIUM, HIGH): MEDIUM
Summary:
The article provides a detailed analysis of the energy sector’s performance in 2025, citing data from FactSet. However, the reliance on a single source for data and analysis, the lack of direct quotes from independent sources, and the absence of multiple independent verification sources raise significant concerns about the credibility and reliability of the information presented. These issues necessitate further verification and caution before publication.