Energy stocks are experiencing a significant boost as oil prices continue to rise, with major players like ExxonMobil (XOM) and Chevron (CVX) reaping benefits from this trend. The ongoing fears of global supply disruptions amid geopolitical tensions have pushed oil prices to new highs, resulting in a corresponding increase in stock prices.
Importantly, oil prices were already on the rise due to rumors preceding the attack on Israel. When writing this report, West Texas Intermediate (WTI) crude was priced at $71.08 per barrel, reflecting a 1.81% increase, while Brent crude also showed gains at $75 per barrel, up 1.63%.
It should be noted that higher oil prices translate into increased revenue and profits for these companies, especially given their significant upstream operations in oil exploration and production. Over the past week, ExxonMobil has gained around 5%, while Chevron increased by 4.2%, reflecting the positive sentiment among investors regarding the energy sector’s profitability in this environment.
Geopolitical Tensions Fuel Oil Price Surge
The recent surge in oil prices is driven by concerns over supply disruptions amid escalating geopolitical tensions in the Middle East. Fears that the ongoing conflict in Israel could intensify, particularly after Iran fired ballistic missiles at Israel, have raised alarms about stability in this crucial oil-producing region.
At the same time, OPEC+, led by Saudi Arabia and Russia, has maintained its strategy of reducing oil output to stabilize and boost oil prices. This strategy aims to boost revenues for oil-producing nations amidst economic uncertainties and geopolitical tensions.
Impact on the Energy Sector and Broader Market
The energy sector’s rally has supported broader market indices, as energy companies make up a significant portion of major indexes like the S&P 500 (SPX).
While the rising oil prices have been a boon for energy stocks, they also raise concerns about inflationary pressures and their potential impact on the global economy.
Is Exxon a Buy or Sell?
Turning to Wall Street, XOM stock has a Moderate Buy consensus rating based on 10 Buys and five Holds assigned in the last three months. At $136.79, the average XOM price target implies 14.06% upside potential.
Is Chevron a Good Stock to Buy?
Turning to Wall Street, Chevron stock has a Moderate Buy consensus rating based on five Buys and five Holds assigned in the last three months. At $173.22, the average CVX price target implies 15.71% upside potential.
