As the US enters a long weekend, energy activity on Wall Street was muted, with little change in positioning seen. Despite a hawkish Federal Open Market Committee (FOMC) meeting, oil flows are beginning to unlock, thanks to the recently signed Iran MOU. However, the recovery remains cautious, as shipowners continue to navigate unresolved risks around mines, security coordination, and evolving transit rules.

The OFS sector underperformed on Wednesday, with SLB being the biggest loser, down by around 2.5%. Investors were disappointed with the company’s lack of execution, despite providing a solid deep dive into its digital initiatives. The focus remains on 2Q/3Q numbers rather than long-term potential. Positioning remains constructive for OFS, with SLB being the most crowded long in the group. However, there is uncertainty around valuation and what is already priced in, intensifying within the sector.

Capex and spending remain a key area of interest, with investors awaiting signals on where spending is headed and how it will impact margins and cost pressures. Josh’s view is that high single-digit year-over-year growth is likely for 2024 and potentially beyond; however, the market remains cautious until more clarity emerges.