Oil Price Volatility: Investment Strategies Amid Iran Conflict
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Mar 23 2026
0mins
Source: Fool
- Background of Oil Price Volatility: Oil prices have been highly volatile due to the conflict with Iran, starting around $60 per barrel at the year's beginning, peaking near $120, and recently falling below $110, indicating significant market uncertainty.
- Oil Stock Investment Strategy: Given the potential closure of the Strait of Hormuz, investors should consider companies like ExxonMobil (XOM), which aims to increase annual earnings capacity by $25 billion and cash flow by $35 billion by 2030, ensuring continued dividends and share buybacks even in a low-price environment.
- Stability of Pipeline Stocks: Another strategy is to invest in pipeline companies like Kinder Morgan (KMI), which derives 70% of its cash flow from take-or-pay contracts, ensuring stable income, with only 4% of cash flows directly exposed to commodity prices.
- Future Growth Potential: Kinder Morgan has nearly $10 billion in pipeline projects underway, providing growth momentum for the coming years, while its attractive dividend (increased for nine consecutive years) offers investors stable returns.
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Analyst Views on XOM
Wall Street analysts forecast XOM stock price to fall
19 Analyst Rating
12 Buy
7 Hold
0 Sell
Moderate Buy
Current: 170.990
Low
114.00
Averages
132.17
High
158.00
Current: 170.990
Low
114.00
Averages
132.17
High
158.00
About XOM
Exxon Mobil Corporation is an energy provider and chemical manufacturer. The Company’s principal business involves exploration for, and production of, crude oil and natural gas; the manufacture, trade, transport and sale of crude oil, natural gas, petroleum products, petrochemicals and a wide variety of specialty products; and pursuit of lower-emission and other new business opportunities, including carbon capture and storage, hydrogen, lower-emission fuels, Proxxima systems, carbon materials, and lithium. Its Upstream segment explores for and produces crude oil and natural gas. The Energy Products, Chemical Products, and Specialty Products segments manufacture and sell petroleum products and petrochemicals. Energy Products segment includes fuels, aromatics, and catalysts and licensing. Chemical Products segment consists of olefins, polyolefins, and intermediates. Specialty Products segment includes finished lubricants, basestocks and waxes, synthetics, and elastomers and resins.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Capacity Expansion: The initial production unit will add 6 million metric tons per year of LNG capacity, and once fully operational, the facility will produce 18 million metric tons annually, significantly enhancing U.S. supply capabilities in the global energy market.
- Strategic Importance: Following damage to Qatar's Ras Laffan facility due to Iranian strikes, this facility is poised to become a critical source of supply, further solidifying the U.S. position in the global energy supply chain.
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- Capacity Expansion: The initial production unit will add 6 million metric tons per year of LNG capacity, and once fully operational, the facility will produce 18 million metric tons annually, significantly enhancing U.S. supply capabilities in the global energy market.
- Strategic Importance: Following damage to Qatar's Ras Laffan facility due to Iranian strikes, this facility is poised to become a critical source of supply, further solidifying the U.S. position in the global energy supply chain.
- Investment Context: The Golden Pass project, with a total investment of $10 billion, sees QatarEnergy holding a 70% stake and Exxon Mobil a 30% stake; despite facing delays and cost overruns since its 2019 inception, the project's launch underscores its strategic significance.
See More
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- Bond Yield Movements: The 10-year Treasury yield stands at 4.35%, while the 2-year yield is at 3.838%, indicating investor expectations for a potential rate cut, which could impact stock market performance and trigger shifts in capital flows.
- Oil Price Surge: Amid concerns that the Houthi group in Yemen may attack Israel, both West Texas Intermediate and Brent crude oil futures have risen, reflecting market sensitivity to geopolitical risks that could lead to volatility in energy stocks.
- Palo Alto Networks Stock Fluctuation: The company's shares rose about 5% on Monday, yet they are down 31% from the October peak, highlighting the volatility in market demand for cybersecurity and its potential impact on future performance.
- McCormick Earnings Outlook: The company's stock has fallen 21.6% in the past three months and is down 35% from last March's high, reflecting cautious market sentiment regarding its future performance, which may affect investor confidence.
See More
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- Market Sentiment Deterioration: The waning interest in energy stocks has led to a general decline in market sentiment, which could negatively impact the stock performance of related companies, especially ahead of upcoming economic data and earnings reports.
- Uncertain Industry Outlook: As global economic uncertainties increase, fluctuations in energy demand may adversely affect the profitability of energy companies, prompting investors to reassess their investment strategies in this sector.
- Shift in Investor Focus: Against the backdrop of declining energy stocks, investors may redirect their attention to other sectors, particularly those that tend to perform relatively well during economic slowdowns, thereby influencing capital flows.
See More
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- Surging Oil Prices: Blocked trade routes in the Strait of Hormuz have pushed WTI crude oil prices near $100 per barrel, creating unprecedented market opportunities for oil companies, particularly ExxonMobil and Chevron, which are uniquely positioned to capitalize on this turbulence.
- ExxonMobil's Integration Advantage: Through vertical integration, ExxonMobil controls the entire supply chain from oil extraction to refining and distribution, ensuring that incremental revenue flows directly to the bottom line during oil price spikes, avoiding profit margin squeezes often faced by traditional exploration companies.
- Chevron's Low-Cost Position: Supported by its low-cost position in the Permian Basin and Guyana assets, Chevron maintains robust profits by leveraging specialized refineries to process its own oil, reducing reliance on expensive raw materials and curtailing volatility in commodity prices.
- Shareholder Value Creation: Both ExxonMobil and Chevron demonstrate the ability to create consistent shareholder value through dividends and buybacks, backed by strong operating cash flow, highlighting their competitive moats and strategic significance in navigating the challenges of the energy market.
See More
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- Oil Price Surge: Crude oil prices skyrocketed by 55% in March following Trump's threat to seize Iranian oil, marking the largest monthly gain ever, which pressures the U.S. economy and forces companies to adjust pricing strategies to cope with rising costs.
- Market Recovery Signal: Despite the S&P 500 and Nasdaq Composite experiencing their worst week of 2026, stock futures rose after Trump indicated “great progress” in negotiations with Iran, reflecting investor optimism about market recovery.
- TSA Employee Pay Restoration: Trump signed an executive order ensuring Transportation Security Administration employees will receive pay after Congress failed to reach a deal to end the government shutdown, alleviating traveler frustrations caused by long security wait times.
- AI Drug Development Partnership: Eli Lilly struck a $2.75 billion deal with Insilico Medicine to bring AI-developed drugs to market, enhancing Lilly's market confidence and potentially accelerating the application of AI in the pharmaceutical industry.
See More
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- Oil Price Surge Impact: As the Iran War continues, tanker routes through the Strait of Hormuz have become critical choke points, pushing WTI crude oil prices near $100 per barrel, benefiting companies like ExxonMobil and Chevron, whose stock prices rose by 3.36% and 1.70%, respectively.
- ExxonMobil's Integration Advantage: ExxonMobil's vertical integration allows it to control the entire supply chain from extraction to refining and distribution, ensuring that when oil prices rise, profits flow directly to the bottom line, avoiding the profit squeezes often faced by traditional exploration companies.
- Chevron's Growth Potential: Chevron's low-cost position in the Permian Basin and its Guyana assets enable it to maintain robust profits in a capital-intensive energy market, while specialized refineries help mitigate commodity price volatility, unlike competitors reliant on expensive raw materials.
- Resilience in Uncertainty: Both ExxonMobil and Chevron's business models provide them with competitive advantages in unpredictable oil markets, as they leverage stable downstream operations and strong cash flows to consistently support stock buybacks and dividend growth, demonstrating resilience amid geopolitical tensions.
See More
