Fahad Alyahya and Khwlah Almutair

March 2026 | KS--2026-CO03

Decoupling in the

Energy Patch

Equity Valuations vs. Commodity Prices in 2022

Commentary

2Decoupling in the Energy Patch: Equity Valuations vs. Commodity Prices in 2022

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• Energy equities outperformed in 2022 even as oil prices retraced materially from March highs.

• Short-run co-movement between energy equities and crude benchmarks weakened markedly after mid-2022.

• Valuations were supported by elevated cash ﬂows and capital discipline despite lower spot prices.

• Rebalancing under inﬂation and ESG-related underweights increased portfolio allocations to energy.

• Europe’s LNG demand shift and OPEC+ supply restraint supported expectations of sustained sector earnings.

Key Points

This paper studies the 2022 breakdown in the short-run relationship between energy

equity valuations and underlying commodity prices. Using daily data on benchmark crude

oil, European natural gas, the S&P 500 energy sector, and major U.S. oil and gas ﬁrms, it

shows that co-movement weakened markedly as energy equities remained elevated even

after spot prices moved well off their peaks. The paper links this divergence to a repricing

of expected cash ﬂows and their durability, supported by unusually strong earnings,

capital discipline, and shareholder distributions. It further situates the episode in a macro

and geopolitical context in which high inﬂation, portfolio rebalancing from structurally

low energy weights, Europe’s LNG demand shift, and OPEC+ production decisions shaped

expectations about scarcity, risk, and supply discipline. The ﬁndings imply that in periods

of supply insecurity, energy equities can embed durability expectations and risk premia

that weaken their near-term linkage to spot commodity prices, with implications for

sector allocation and for how investors interpret energy-market policy news when equity–

commodity linkages weaken.

Keywords: Energy Equity-Commodity Decoupling, Energy Firm Valuation, Oil Price-Equity Co-Movement, Cash-Flow Durability,

Capital Discipline, S&P 500 Energy Sector, ESG Constraints, Inﬂation and Portfolio Rebalancing, LNG Supply to Europe, OPEC+

Production Cuts

Abstract

6Decoupling in the Energy Patch: Equity Valuations vs. Commodity Prices in 2022 01

Introduction

The year 2022 produced one of the most signiﬁcant energy shocks of the past two

decades. As the global economy emerged from the COVID-19 pandemic, oil and gas

markets were already tight, with demand recovering faster than supply. Russia’s invasion

of Ukraine in February 2022 turned this cyclical tightening into a full-ﬂedged energy

security crisis. Crude oil prices brieﬂy returned to levels last seen during the 2008

commodity boom, while European natural gas benchmarks spiked to unprecedented

heights as ﬂows of Russian pipeline gas were curtailed, and buyers scrambled for

alternative supplies.

In ﬁnancial markets, a key aspect of this episode was not only

the magnitude of the price movements but also the evolution

of equity valuations of major energy companies relative to the

underlying commodities. Historically, oil and gas producers have

traded as leveraged plays on crude prices: when oil rises, energy

equities tend to rise more, and when oil falls, they tend to fall

more (see, for example, Sanusi and Ahmad 2016; Diaz, Mollick,

and Saucedo 2016).

In 2022, this pattern broke down. Crude oil prices rose sharply

in the ﬁrst half of the year and then declined in the second half

(U.S. EIA 2023a), and by year-end, West Texas Intermediate

(WTI) crude was only modestly higher than at the start of 2022

(Reuters 2022). Over the same period, the S&P 500 energy

sector gained around 60%-65%, making it by far the best-

performing sector in the index (Saul 2022; Popina 2022). Kimani

(2022) describes this as a “peculiar disconnect” between crude

prices and oil stocks.

This paper examines the decoupling between energy ﬁrm

valuations and underlying commodity prices. Using daily data

on benchmark oil, European gas, and major U.S. energy equities,

it documents how the historically strong co-movement between

energy stocks and crude oil weakened markedly in 2022. The

paper then discusses mechanisms consistent with this shift –

cash-ﬂow surprises, capital discipline, and portfolio rebalancing

under inﬂation and energy security concerns. It provides a

concise, descriptive account of when the relationship changed

and what it implies for how energy equities are priced.

The paper is organized as follows. Section 2 reviews the main

phases of the 2022 energy shock, from prewar tightness to the

subsequent price correction. Section 3 presents evidence of the

decoupling between energy equities and commodity prices at

both the sector and ﬁrm levels. Section 4 discusses the rotation

into energy by asset managers and the role of U.S. production,

the natural gas boom, and the Strategic Petroleum Reserve.

Section 5 takes a global perspective, focusing on Europe’s

scramble for LNG and the implications of OPEC+ production

cuts. Section 6 concludes with lessons from the episode for

investors and policymakers.

7Commentary I March 2026

The decoupling between energy company valuations and commodity prices in 2022 took

place against the backdrop of an exceptionally volatile year for global oil and gas markets.

This section brieﬂy traces the main phases of the 2022 energy shock, from prewar

tightness and the immediate impact of Russia’s invasion of Ukraine to the subsequent

price correction later in the year. It provides the market context for the divergence

between commodity prices and energy equities documented in the following sections.

.The 2022 Energy Shock:

A Brief Chronology

2.1 From Tight Markets to the

Russia-Ukraine Conﬂict

At the start of 2022, oil markets were already tight. Global

demand was rebounding strongly from the COVID-19

shock, while supply growth lagged after several years of

underinvestment and pandemic-related disruptions. By late

January, WTI and Brent were near multiyear highs (Verma 2022).

Russia’s invasion of Ukraine on February 24, 2022, added a major

geopolitical shock to an already constrained market. Fears of

sanctions on Russian energy exports, self-sanctioning by private

buyers, and potential physical disruptions to supply prompted a

further sharp move higher in prices. On the day of the invasion,

Brent crude brieﬂy climbed above $105 per barrel for the ﬁrst

time since 2014 (Kelly 2022; Mohamad 2022), and WTI moved

above $100 per barrel. What had initially looked like cyclical

tightening thus turned into a full-ﬂedged energy security crisis

for many importing countries.

2.2 The March Price Spike and

Policy Response

In early March, oil prices spiked sharply amid heightened

disruption risk and uncertainty over Russian supply (Macheel

and Stevens 2022). Brent crude traded in a similarly elevated

range. European natural gas prices, already elevated before the

invasion, rose even more sharply as buyers scrambled to secure

non-Russian supplies and ﬁll storage (Maguire 2022).

In response to the price spike and concerns about the impact on

consumers, the United States announced large releases from

the Strategic Petroleum Reserve (SPR), including a six-month,

1 million barrels-per-day drawdown starting in late March (The

White House 2022). Other members of the International Energy

Agency (IEA) also agreed to coordinated emergency stock

releases (IEA 2022).

8Decoupling in the Energy Patch: Equity Valuations vs. Commodity Prices in 2022

2.3 Sustained High Prices and

the Late-2022 Correction

From the onset of the Russia-Ukraine conﬂict through much

of the ﬁrst half of 2022, crude prices remained exceptionally

high. Brent and WTI traded well above their early January levels

and, for extended periods from March-June, spot prices for

both benchmarks were above $100 per barrel. The combination

of strong demand, constrained supply, uncertainty about

Russian exports, and limited spare capacity among other major

producers kept prices elevated.

From June onward, recession concerns and tighter monetary

policy contributed to a pronounced correction in oil prices (U.S.

EIA 2023a; Reuters 2022). By the ﬁnal trading day of 2022, Brent

closed around $85 per barrel, while WTI ﬁnished only modestly

above its level at the start of the year, well below the peak

reached in early March (Reuters 2022). European gas prices

also eased from extreme highs later in the year. In contrast,

as discussed in Section 3, the share prices of many oil and gas

ﬁrms listed on U.S. exchanges continued to perform strongly,

and broad energy equity indices ended 2022 as the standout

outperformers in an otherwise weak year for global equities

(Saul 2022; Popina 2022).

Figure 1 summarizes the surge and subsequent correction in

benchmark oil and gas prices during 2022. Together with Figure

2 and Table 1, it highlights two features central to the paper: the

magnitude of the 2022 price shock and the fact that commodity

prices had fallen materially from their peaks by year-end, even

as energy equities remained elevated.

Figure 1. Crude oil and European natural gas benchmark prices in 2022.

Source: Authors’ calculation, based on Bloomberg Terminal.

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ICE Brent ICE TTF NYMEX WTI

9Commentary I March 2026 03

Evidence of Decoupling:

Energy Equities vs.

Commodity Prices

This section documents how, in 2022, the performance of listed energy companies

diverged from the behavior of the underlying commodities they produce. It ﬁrst recalls the

usual strong link between oil prices and energy equities, then shows how 2022 broke that

pattern at both the sector and ﬁrm levels, before relating the decoupling to earnings and

cash-ﬂow surprises.

3.1 The Usual Link Between Oil

Prices and Energy Equities

Under normal conditions, the share prices of oil and gas

producers tend to move closely with crude prices. Because cash

ﬂows are highly exposed to realized prices, energy equities

typically co-move strongly with crude benchmarks, especially

over short- and medium-term horizons (Sanusi and Ahmad 2016;

Díaz, Mollick, and Saucedo 2016).

Figure 2 illustrates this relationship using the S&P 500 energy

sector index and the front-month WTI crude oil futures price.

The chart shows daily data from January 2022 onward. For

much of the ﬁrst half of the year, the sector index and WTI

move broadly together: both rise sharply as the post-pandemic

demand recovery meets constrained supply and, after Russia’s

invasion of Ukraine, both remain elevated as the energy shock

deepens

3.2 When Prices Fell and

Stocks Did Not

From mid-2022 onward, the usual link began to weaken. As

discussed in Section 2, oil prices corrected meaningfully from

their March peak. By December, WTI was roughly 40% below its

intrayear high, and Brent had also declined substantially, even

though both benchmarks were still somewhat higher than at

the start of 2022 (Reuters 2022; U.S. EIA 2023a). In contrast, the

S&P 500 energy sector index ended 2022 up around 60%-65%,

making energy by far the best-performing sector in the broader

U.S. equity market (Saul 2022; Popina 2022).

The broad sector picture is reﬂected at the ﬁrm level. Pre-2022,

energy equities did not always translate oil price strength

into comparable returns, but 2022 reversed that pattern

(Table 1). The Russia-Ukraine conﬂict in February 2022 ampliﬁed

already tight markets, producing a sharp spike and subsequent

correction in oil and gas prices.

The price dynamics over the course of the year tell a similar

story. Figure 3 plots Chevron, ExxonMobil, and WTI prices

indexed to 100 at the start of 2022. All three series initially move

together during the ﬁrst quarter. From late spring onward,

however, the paths diverge: oil prices roll over and end the year

close to, or slightly below, where they started, whereas the two

oil majors remain 20%-40% higher.

A 60-day rolling correlation between the S&P 500 energy sector

index level and the WTI crude oil price summarizes this change.

The correlation is close to 0.8-0.9 for much of early 2022, but

falls markedly from midyear and remains low into year-end,

10 Decoupling in the Energy Patch: Equity Valuations vs. Commodity Prices in 2022

Figure 2. S&P 500 energy sector index and WTI crude oil price.

Table 1. Annualized returns and volatility: crude oil vs. major U.S. oil ﬁrms.

Note: The left axis shows the S&P 500 energy sector index level daily data, and the right axis shows the NYMEX WTI front-month futures price in U.S. dollars per barrel per day.

Source: Authors’ calculation, based on Bloomberg Terminal.

Note: Based on daily log returns from Bloomberg prices. Returns and volatility are annualized assuming 252 trading days per year.

Source: Authors’ calculations, based on Bloomberg Terminal.

2020-2021 2022

Asset Mean return (%) Volatility (%) Mean return (%) Volatility (%)

WTI crude oil 40.6 70.7 6.5 48.5

Chevron (CVX) 1.6 47.1 42.7 33.0

ExxonMobil (XOM) -4.7 43.0 59.2 35.1

indicating a material weakening in short-run co-movement. This

pattern indicates that the usual tight short-run co-movement

between energy equities and oil prices weakened materially in

the second half of 2022.

Taken together, the sector-level evidence in Figure 2, the return

and volatility statistics in Table 1, and the ﬁrm-level divergence

in Figures 3 and 4 point to a clear conclusion: By late 2022, U.S.

energy equities were no longer simply reﬂecting the evolution

of spot oil prices. Something else was supporting valuations.

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11 Commentary I March 2026

Figure 3. Chevron and ExxonMobil vs WTI crude oil, indexed to 100 at the start of 2022.

Figure 4. Divergence of Chevron and ExxonMobil from WTI crude oil prices: difference in indexed performance

(100 = start of sample).

Note: Daily closing prices for Chevron (CVX), ExxonMobil (XOM), and NYMEX WTI front-month futures, normalized to 100 on January 31, 2022.

Source: Authors’ calculations, based on Bloomberg Terminal.

Note: Divergence is deﬁned as the difference between each stock’s indexed price and the indexed NYMEX WTI front-month futures price (all series normalized to 100 at the start of 2022).

Source: Authors’ calculations, based on Bloomberg Terminal.

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12 Decoupling in the Energy Patch: Equity Valuations vs. Commodity Prices in 2022

Figure 5. Rolling 60-day correlation between the S&P 500 energy sector index and WTI crude oil: 60-day rolling window, daily

log returns.

Note: The shaded area shows an approximate 95% conﬁdence interval based on the Fisher z transform. Correlations are computed on daily price levels.

Source: Authors’ calculations, based on Bloomberg Terminal.

3.3 Earnings, Cash Flows, and

Surprises

One candidate to explain the decoupling is ﬁrm-level ﬁnancial

fundamentals and capital allocation. The 2022 price shock

generated exceptional cash ﬂows for large oil and gas

producers, but companies responded in ways that were

markedly different from previous upswings. Rather than

ramping up capital expenditures as aggressively as in past

booms, many majors emphasized capital discipline, balance

sheet repair, and shareholder distributions. Large producers

reported exceptional 2022 proﬁts and free cash ﬂow, and

emphasized shareholder distributions and debt reduction

rather than rapid capex expansion (ExxonMobil 2023; Chevron

Corporation 2023; Bousso and Valle 2023).

Earnings data underscore how unusual 2022 was. The energy

sector recorded the highest earnings growth of all 11 S&P 500

sectors, with year-on-year earnings up by about 137% compared

with roughly 2% for the index as a whole (Kimani 2022).

In valuing equities, investors care not only about the level of

proﬁts, but also about how those proﬁts deviate from prior

expectations. In the years preceding 2022, the listed energy

sector had generally delivered weak relative performance and

was increasingly constrained by environmental, social, and

governance (ESG) considerations. Oil and gas stocks had been

largely out of favor with many institutional investors prior to

their sharp outperformance in 2022 (Slav 2023).

Against this backdrop, the combination of stronger-than-

expected commodity prices and a more shareholder-oriented

use of cash ﬂows – with an emphasis on dividends, share

buybacks, and debt reduction rather than aggressive capacity

expansion – amounted to a substantial positive surprise. Large

integrated oil companies began to be priced less as high-

beta proxies for spot oil prices and more as cash-generative

businesses whose valuations depend primarily on expectations

about medium-term cash ﬂows rather than the precise level of

front-month futures prices.

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13 Commentary I March 2026

This perspective helps explain why energy equities remained

resilient even as oil and gas prices retreated from their peaks.

Once valuations had adjusted to reﬂect higher expected cash

ﬂows and a different capital allocation regime, short-term

ﬂuctuations in spot prices mattered less than the perceived

durability of those cash ﬂows. In other words, the decoupling

observed in 2022 is consistent with a shift in how markets price

energy ﬁrms: less as simple commodity proxies, and more as

companies with balance sheet strength, disciplined investment,

and (at least over a multiyear horizon) signiﬁcant pricing power.

14 Decoupling in the Energy Patch: Equity Valuations vs. Commodity Prices in 2022

What Drove the Rotation

into Energy? 04

The decoupling documented in Section 3 did not occur in isolation. It reﬂected both a

reassessment of energy companies’ fundamentals and a broader portfolio rebalancing by

investors navigating high inﬂation, rising interest rates, and heightened energy security

concerns. This section discusses two sets of drivers: the behavior of asset managers

caught between inﬂation hedging and ESG commitments, and the speciﬁc role of U.S.

production, the natural gas boom, and releases from the SPR.

4.1 Asset Managers Between

Inﬂation and ESG

In the years leading up to 2022, ESG-oriented mandates

contributed to structural underweights in traditional energy

equities (Skadden, Arps, Slate, Meagher & Flom LLP 2022). In

2022, this positioning mattered: energy was the only S&P 500

sector with positive returns, yet it still represented only a small

share of broad U.S. equity indices, around 4%, implying that

even modest reallocations could have outsized price effects

(Riverwater Partners 2022).

The 2022 energy shock forced a partial reevaluation of this

positioning. With inﬂation reaching multidecade highs and

central banks tightening policy aggressively, the macroeconomic

backdrop for investors became unusually challenging (IMF

2022). In this environment, asset allocators came under greater

pressure to deliver positive real returns. Energy companies

offered a combination that was rare elsewhere in the equity

universe: strong near-term earnings momentum, high free-cash-

ﬂow yields, and, in many cases, explicit commitments to return

cash to shareholders via dividends and share buybacks rather

than embarking on large new capital expenditure programs

(Kimani 2022; ExxonMobil 2023).

In 2022, increased exposure to energy was often a tactical

response to unusually favorable risk-return conditions, with

allocations concentrating in large, liquid integrated ﬁrms.

Energy equities also functioned as a partial inﬂation hedge,

given their positive exposure to energy prices and the tendency

of inﬂation-hedging portfolios to overweight oil and gas equities

(Ang, Brière, and Signori 2012; Pesci et al. 2022; Hartford Funds

2023).

ESG considerations did not disappear, however. Evidence

from fund holdings suggests that sustainable strategies, on

average, remained underweight the energy sector relative

to conventional portfolios (Morgan Stanley Institute for

Sustainable Investing 2023; Riverwater Partners 2022). Some

institutions chose to gain exposure through broad-market

indices rather than dedicated energy mandates, and others

kept positions close to benchmark weights rather than adopting

large active overweights. Even so, positioning shifted: after

years of underownership, energy moved closer to benchmark

weights as fundamentals improved.

15 Commentary I March 2026

4.2 U.S. Production, Natural

Gas Boom and the SPR

The rotation into energy was supported by U.S. supply discipline

and the U.S. role in supplying LNG to Europe. Even as prices

surged, producers prioritized shareholder returns and balance

sheet repair over rapid volume growth, reinforcing expectations

of cash-ﬂow durability (Natural Gas Intelligence 2022). This

constrained supply response helped convince investors that

high cash ﬂows could persist even without aggressive expansion

in drilling activity.

Natural gas told a different story. U.S. gas production reached

record levels in 2022 as domestic demand remained strong and

export capacity expanded (Casey 2023; U.S. EIA 2023b). The

disruption of Russian pipeline ﬂows to Europe created an urgent

need for alternative suppliers, and U.S. LNG exports played a

central role in ﬁlling the gap. Between 2018 and 2022, total U.S.

LNG exports rose sharply as new export capacity came online,

and exports to Europe grew rapidly (Turk 2024). Figure 6 shows

how Europe overtook Asia as the main destination for U.S. LNG

cargoes in 2022, underscoring the degree to which the United

States became a key swing supplier to European gas markets.

Another important element of the 2022 landscape was the use

of the U.S. SPR. In an effort to ease fuel prices and address

supply disruptions linked to Russia’s invasion of Ukraine, the

U.S. government announced and implemented emergency SPR

drawdowns totaling about 180 million barrels over the course

of the year (U.S. EIA 2022). SPR inventories fell to around 405

million barrels by mid-October 2022, the lowest level since the

mid-1980s (U.S. EIA 2022). At the same time, the drawdowns

reduced the buffer available to absorb future shocks, leaving

investors facing a tight physical market and a strategic reserve

at historically low levels.

Taken together, these factors provided a fundamental backdrop

that made the rotation into energy easier to justify. Limited

supply growth, robust gas demand, record exports, and an

unusually tight margin of safety in global inventories all

supported the view that energy companies’ elevated earnings

and cash ﬂows might prove more durable than a simple glance

at spot oil prices would suggest. In that sense, the decoupling

between equity valuations and contemporaneous commodity

prices documented in Section 3 can be seen as an endogenous

response to a new set of fundamentals rather than a purely

speculative overshoot.

Figure 6. U.S. LNG exports by destination region, annual data from 2018-2022.

Note: Annual LNG export volumes aggregated from destination-country data.

Source: Authors’ calculations, based on U.S. EIA (2024).

2018 2019 2020 2021 2022

Exports (million cubic feet)

Exports to Asia Exports to Europe Total exports

16 Decoupling in the Energy Patch: Equity Valuations vs. Commodity Prices in 2022

Global Repricing: Europe,

LNG and OPEC+ 05

The energy shock of 2022 triggered not only a revaluation of listed oil and gas companies,

but also a broader repricing of energy across regions and fuels. Nowhere was this more

visible than in European gas markets, where the loss of Russian pipeline ﬂows forced a

rapid search for alternative supplies, and in the oil market response to OPEC+’s production

decisions. This section highlights how Europe’s scramble for gas drew in U.S. LNG and

how OPEC+’s production cuts interacted with, but did not fully reverse, the downward

correction in oil prices.

5.1 Europe’s Scramble for Gas

and the Role of U.S. LNG

Europe entered 2022 heavily dependent on Russian pipeline

gas, with limited short-term options to replace those volumes.

The sharp reduction in ﬂows through key routes such as Nord

Stream, combined with sanctions and self-sanctioning by

buyers, pushed prices at the Dutch TTF hub to unprecedented

levels and raised fears of physical shortages for the winter

heating season (IEA 2025; Pandya 2022).

U.S. LNG emerged as a central part of this adjustment. Cargoes

that previously sailed to Asia were diverted to Europe, new

contracts were signed with European buyers, and regasiﬁcation

capacity was rapidly expanded in several countries. As U.S. LNG

exports to Europe rose sharply, ﬂows to Asia fell back from their

2021 peak.

For energy companies with LNG portfolios, and for U.S. gas

producers more broadly, this reorientation of trade patterns

reinforced the positive earnings surprise discussed in Section

3. The prospect of sustained European demand for U.S. LNG at

prices well above historical norms helped underpin expectations

of strong medium-term cash ﬂows, even as spot prices

retreated from their peaks.

5.2 OPEC+ Production Cuts

On the oil side, the other major global actor shaping

expectations in 2022 was OPEC+. Growth concerns mounted

in the second half of the year, and prices slid from their March

peak. In October 2022, OPEC+ announced a headline 2 million

bpd production cut, citing uncertainty and rising economic

slowdown risks.

Oil prices ﬁrmed brieﬂy after the October cut but continued

trending lower into year-end, while energy equities showed

limited additional upside. As Figure 2 illustrates, after an initial

rally around October’s OPEC+ decision, the ﬁnal weeks of 2022

are characterized more by sideways or slightly softer energy

equity prices than by a renewed sustained surge. By late 2022,

fears of recession, tighter monetary policy, and slowing oil

demand in key consuming regions were exerting downward

pressure on prices. Against this backdrop, energy equities,

having already priced in a substantial improvement in cash

ﬂows, were less sensitive to marginal OPEC+ announcements

than earlier in the year. Even with spot prices off their peaks,

valuations continued to reﬂect expectations of stronger

earnings power than precrisis market valuations had implied.

Conclusion 06

In 2022, energy equities substantially outperformed oil, even as benchmark prices

corrected, and the usual short-run co-movement weakened. The evidence in Figures 2-5

and Table 1 is consistent with valuations shifting toward expectations about cash-ﬂow

durability and capital discipline rather than tracking spot prices mechanically.

Second, ﬁrm-level ﬁnancial fundamentals and capital allocation

mattered in a different way from previous cycles. Instead of

rapidly expanding capital expenditure and production, many

ﬁrms chose to keep investment restrained and channel windfall

revenues into debt reduction, dividends, and share buybacks.

These behaviors supported a narrative of “disciplined” energy

companies that could generate substantial free cash ﬂow even

if prices normalized from their peaks. Against a macro backdrop

of high inﬂation and rising interest rates, these cash ﬂows were

particularly attractive to asset managers seeking real returns,

even as they continued to navigate ESG constraints. The rotation

into energy was thus not simply a speculative bet on ever-

higher oil prices, but also a portfolio response to an unusually

favorable risk-return proﬁle for the sector.

Third, the global dimension of the shock mattered for how

investors perceived the durability of earnings. Europe’s

scramble for gas and the redirection of U.S. LNG exports toward

European buyers, documented in Figure 6, reinforced the idea

that U.S. producers and LNG exporters would enjoy structurally

stronger demand for several years. This shift underscored a

broader transition in market sentiment, in which energy security

and the reliability of supply became primary drivers of long-

term valuation. These factors contributed to a view that, even

with prices off their peaks, the medium-term balance of risks for

energy company earnings remained tilted to the upside.

Overall, 2022 shows that energy equities can diverge sharply

from spot commodity prices when markets reprice expected

cash-ﬂow durability and capital allocation behavior. The

relationship may tighten again in future shocks, but the episode

demonstrates that it is not purely mechanical.

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About the Authors

Fahad Alyahya

Fahad Alyahya is a Research Associate in the Oil and Gas team at KAPSARC, involved

in economic modeling for the energy sector and evidence-based policy analysis. His

work focuses on energy outlooks, geopolitics, energy investment, and global ﬁnance.

He holds a B.S. in mechanical engineering from King Saud University and was part

of KAPSARC’s inaugural Graduate Development Program. He contributes to shaping

insights and strategies for the evolving energy landscape, supporting sustainable

development and energy transition initiatives.

Khwlah Almutair

Khwlah Almutair is a Postdoctoral Researcher in the Oil and Gas Program at KAPSARC.

Her research focuses on ﬁnancial market dynamics, sovereign wealth fund strategies,

and the interplay between economic policy and energy markets. Dr. Almutair has over

15 years of experience in academia and applied research, with expertise in ﬁnance,

labor economics, macroeconomic policy, and big data applications. At the University

of Massachusetts Amherst, she taught a range of economics courses, including

macroeconomics, money and banking, and Economics in the Age of Big Data. Her

work contributes to deepening the understanding of energy investment and ﬁnancial

stability in resource-rich economies. She holds a Ph.D. and M.A. in Economics from the

University of Massachusetts Amherst.

About the Project

The KAPSARC Oil Market Outlook (KOMO) is a quarterly, online report providing data,

forecasts, and analysis on global oil market supply, demand, and balances. It offers

insights into factors affecting oil prices, such as geopolitical conﬂicts, inventory levels, and

economic recovery. The report focuses on market trends to help stakeholders understand

energy market dynamics.

22 Decoupling in the Energy Patch: Equity Valuations vs. Commodity Prices in 2022

kapsarc.org /kapsarcinfo@kapsarc.org