President Joe Biden has confirmed that we have seen the beginning of Russia’s invasion of Ukraine. The eyes of the world remain on the small nation as Western economic powers levy sanctions against its much larger aggressor. The ramifications of the conflict are significant for both countries. Financial markets across the globe, too, are feeling the sting.
While many stocks are being pushed down, the oil and gas sector is enjoying a ride to the top. Crude oil prices are nearing $100 per barrel, pushing up many oil stocks. These prices haven’t reached triple digits since 2014.
Russia is one of the world’s largest oil and gas exporters. For the countries that rely on its supplies, these sanctions could mean trouble. As the Washington Post reports, much of Europe is dependent on Russian exports for heating homes and industrial buildings. Ryan Fitzmaurice, a commodity strategist at Rabobank recently speculated that further disruptions in Russia’s oil supply chain could indeed send prices up even further.
The Post also notes, though, that many analysts do not foresee significant disruptions in the oil supply chain. For an economy like Russia’s to simply shut down its extensive oil and gas operations would pose a significant expense. At this point, it is impossible to predict how Russia will react to these sanctions.
For as long as prices continue to rise, though, oil stocks will continue to benefit. Let’s take a closer look at the oil stocks to buy as the conflict persists.
- ConocoPhillips (NYSE:COP)
- Devon Energy (NYSE:DVN)
- Enbridge (NYSE:ENB)
Oil Stocks to Buy: ConocoPhillips (COP)
Source: JHVEPhoto / Shutterstock.com
One of America’s leading oil and gas producers, ConocoPhillips has already been hailed among the potential winners of the Russia-Ukraine conflict.
Based on production and proved reserves, it bills itself as the world’s largest independent exploration and production (E&P) company. Its holdings expand across 14 countries, encompassing much of Europe and parts of the Middle East. As InvestorPlace contributor Josh Enomoto describes, ConocoPhillips is “one of the biggest oil stocks levered to the upstream component of the energy supply chain.”
Oil companies built around an upstream approach are considered the top of their field. Enomoto notes that upstream oil stocks can sometimes carry more risk. While that is true, ConocoPhillips is still an established industry leader, making it a “balanced” bet for the category. In September 2021, Enomoto named COP to a list of oil stocks to buy for anyone who believed that barrels would hit a $100 price target. Months later, we are about to see exactly that happen. ConocoPhillips’ recent performance indicates that its place on the list was well deserved.
As oil prices have risen throughout the past six months, COP stock has increased by more than 60%. For as long as the current oil boom persists, it will remain among the winners.
Devon Energy (DVN)
Source: Jeff Whyte / Shutterstock.com
Another consistent winner of the American oil boom, DVN has enjoyed a better season so far than many of its larger peers such as COP and Chevron (NYSE:CVX). The Oklahoma-based company is primarily focused on the hydrocarbon exploration business. It has enjoyed bullish action since its reported earnings for the fourth quarter beat analyst expectations.
As InvestorPlace contributor Joel Baglole recently reported, this impressive start to the year saw several Wall Street institutions raise their price targets on DVN stock including Credit Suisse. “With proven oil reserves of 752 million barrels, Devon Energy is well-positioned to perform strongly,” Baglole wrote.
That assessment is well supported by DVN stock’s performance.
Shares have risen by more than 94% over the past six months. Enomoto also named it as an oil stock to buy for bulls who saw prices reaching the $100 target. He noted that Devon’s domestic focus would likely prove advantageous if geopolitical conflicts were to become a factor for oil markets. The performance that we’ve seen from DVN stock since then lends considerable support to his argument.
Investors are looking for oil plays close to home as tensions worsen overseas. Devon will likely be a tempting investment, as it should be.
Oil Stocks to Buy: Enbridge (ENB)
Source: JHVEPhoto / Shutterstock.com
Earlier this month, MarketWatch reported that analysts were favoring Canadian oil producers. One name that stands out among the country’s growing field is Enbridge.
Based in Calgary, this company has carved out an impressive market share. In addition to its pipelines, Enbridge also boasts operations in natural gas utility operations. What some may not know, though, is that the company is responsible for transporting more than one-quarter of North America’s crude oil production. This means it moves more than 30% of the continent’s crude oil and as well as almost 20% of the United States’ natural gas. Enbridge is also interested in renewable energy, and its assets include a wind portfolio.
As oil pipelines across Europe are compromised by the sanctions imposed on Russia, both prices and demand will increase for U.S. and Canada-based producers. InvestorPlace contributor Tezcan Gecgil recently named ENB as an investment to guard against rising inflation. While her argument still holds true, the current boom is an even more pressing reason for it to be listed among oil stocks to buy. It should absolutely be on the radar of any investor looking for bullish plays on the Russia-Ukraine conflict.
On the date of publication, Samuel O’Brient did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
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