As Oil Breaks $100 Again, the Energy Stocks Could Be Massive Winners

Oil prices shot above the $100 per-barrel mark again last week, as the war in Iran took a troubling turn. With things rapidly escalating in the Strait of Hormuz and oil prices briefly flirting with the $120 level, there’s serious concern about what the broader implications will be for everyday investors. Undoubtedly, higher prices at the pump and perhaps just about everywhere could be in the cards if triple-digit oil is the new normal.

In any case, the energy producers seem like an even more enticing hedge at this point, especially for investors who’ve lightened up on the names in recent years. As the tech trade leads the market lower, I do view the big oil names as worthy pick-ups if not for the return of $100+ oil, perhaps as a play on the hard assets trade, as investors look for areas to invest that won’t be upended by the rise of agentic AI.

Of course, soaring energy demands of next-generation AI data centers also seem to fuel the case for owning energy, even if it does feel a bit late to buy after the broad basket of energy stocks shot up like a coiled spring this year. The State Street Energy Select SPDR ETF (NYSEARCA:XLE | XLE Price Prediction) is up close to 27% year to date after trading sideways for close to four years.

Betting on the blue-chip energy titans could be the move

While oil could slide just as quickly as it rose, I do think that those who are concerned about $100 oil should look to the energy plays as a place to diversify. For the most part, the major energy producers still stand out as looking incredibly cheap, even if the oil settles in a range that’s nowhere close to where it’s trading right now.

So, which energy stocks are worthy pick-ups right here? I’d have a preference for the integrated heavyweights, given their strong payouts and ability to thrive, even in the face of an oil price reversal. Could oil rise back to $120? $150? Maybe even $200?

Perhaps a brief jump to $150 could happen if things do get horrific regarding strikes across the Middle East and there’s a standstill at Hormuz. Either way, investors should be prepared for everything and, with that, a name like Exxon Mobil (NYSE:XOM) stands out as a sound portfolio diversifier, at least in my view. Of course, just about any big oil stock would do it in this turbulent environment.

Exxon Mobil

Shares of the $650 billion energy behemoth are up just shy of 30% year to date. The company saw production swell to 5 million barrels per day in the latest quarter, and with the firm making moves to drive billions more in cost savings over the next four years, it seems that Exxon Mobil was set up nicely, well before the year began.

With incredible operating economics, especially at scale, Exxon’s low breakeven price (even a fall to $35 wouldn’t render the firm unprofitable), I consider the 2.64%-yielder to be a terrific and very bountiful hedge, at least in my opinion, against a further escalation in the Middle East conflict and a potential stagflationary shock, which few investors may be well-equipped to grapple with.

In the coming weeks and months, we’ll see what’s in the cards for big oil, as prices move viciously in both directions. For patient investors who already have enough energy exposure, perhaps playing the name on the way down could make the most sense, especially since the war might be closer to a conclusion than the market is baking in.

Either way, Exxon Mobil or the State Street Energy Select SPDR ETF will be the most-watched trade on Wall Street as we pass mid-March.