Top Oil Stocks to Buy if Iran Closes the Strait of Hormuz
U.S. shale giants could surge as geopolitical tensions drive crude prices higher.
As tensions in the Middle East escalate, investors are increasingly eyeing the Strait of Hormuz, the world’s most vital oil artery, as a potential flashpoint for global energy disruption. Roughly 20 million barrels of oil, or 21% of daily global consumption, pass through this narrow channel every day. Now, with Iran threatening a blockade in retaliation for recent U.S. and Israeli strikes on its nuclear facilities, energy markets are on edge.
If Iran follows through, it could ignite a surge in crude oil prices and rattle global equities. Brent crude briefly jumped above $80 per barrel after the initial strikes and could skyrocket further. Goldman Sachs (NYSE: GS) predicts a potential spike to $110 per barrel in the event of a full blockade, while HSBC (NYSE: HSBC) sees upside risks above $80. In such a scenario, U.S.-focused oil producers, safely insulated from Middle East supply routes, could become the market’s top performers.
Let’s take a closer look at the U.S. oil stocks best positioned to benefit from a closure of the Strait of Hormuz.
ConocoPhillips: Diversified Strength With U.S. Dominance
ConocoPhillips (NYSE: COP) stands tall as one of the largest U.S.-based oil and gas producers. Despite its global footprint, about 75% of Conoco’s earnings come from North America, particularly the contiguous U.S., Canada, and Alaska. That positioning becomes crucial if Middle East exports suddenly fall off a cliff.
The company’s leverage to oil prices is significant. According to management, a $1 increase in West Texas Intermediate (WTI) crude boosts its operating cash flow by $140 million to $150 million. With a solid balance sheet, a modest 11.6x earnings multiple, and a 3.4% dividend yield, Conoco offers a lower-risk way to ride any oil price rally.
Longer-term, Conoco’s low breakeven supply costs under $40 per barrel and strategic LNG investments in Alaska and Asia bolster its appeal. Should global supply tighten, few companies are better prepared to scale up and deliver strong shareholder returns.
EOG Resources: Pure-Play Shale Winner
EOG Resources (NYSE: EOG) operates entirely within the U.S., making it completely immune to the Strait of Hormuz chokepoint. With operations concentrated in key shale basins and well-located assets near pipeline and storage infrastructure, EOG has consistently delivered top-tier realizations for its oil and gas output.
Since 2021, EOG has more than doubled its dividend and ramped up share repurchases. Its capital discipline is unmatched; the company now returns 98% of its free cash flow to shareholders. Perhaps most impressively, EOG is unlevered, with more cash than debt on its balance sheet.
If oil prices spike on a Middle East disruption, EOG’s superior margins and clean financials could make it one of the top-performing energy stocks in the market.
Occidental Petroleum: Buffett’s Bet on the Permian
Warren Buffett’s favored oil stock, Occidental Petroleum (NYSE: OXY), also stands to gain if global crude supplies get squeezed. About 84% of Occidental’s production comes from the United States, with over half of it located in the prolific Permian Basin. The company boasts 2.9 million acres in the region and breakeven costs under $60 per barrel, and in many cases, even below $40.
In a recent earnings call, Occidental noted it has cut fracking costs by 12% since 2023, further improving its operating leverage. Though Occidental carries a higher debt load following its $12 billion CrownRock acquisition, that debt acts as leverage in a rising oil price environment.
A Hormuz disruption would boost crude prices and Occidental’s profits disproportionately. That upside, coupled with its deep onshore reserves, likely explains why Buffett remains so bullish.
Read Now: The Small Cap Gold Market is Breaking Out Aggressively — Here’s What to Do
Devon Energy: Pure Exposure, Pure Upside
Devon Energy (NYSE: DVN) is another U.S. shale specialist that thrives in volatile oil markets. Its business model embraces price fluctuations, leaning into the risk with a lean operation and high-return wells. Devon doesn’t hedge heavily or diversify across value chains like the oil majors; it bets on oil prices moving higher, and that bet could soon pay off.
With an investment-grade balance sheet, low breakeven costs, and growing production, Devon is primed to reward shareholders in a high-price oil environment. It’s a more speculative play than Conoco or EOG, but one that could deliver oversized gains if crude surges.
Chevron: The Big Oil Dividend Machine
Chevron (NYSE: CVX), a Dow component and one of the most iconic names in energy, also looks compelling. Though it has more global exposure than others on this list, Chevron still benefits significantly from rising oil prices. Every $1 move in Brent crude affects its earnings by $450 million.
Chevron expects to generate $10 billion in incremental free cash flow by 2026 at $70 Brent, and has increased its dividend for 38 consecutive years. If oil climbs toward $100 on a Strait closure, Chevron’s profits and dividends will likely follow suit.
Broader Market Impact: Wall Street Watching Closely
Financial giants are already modeling the potential impact of a Hormuz blockade. Goldman Sachs sees Brent averaging $95 by Q4 if oil flows through the strait are halved. HSBC also expects a major upside in oil prices on increased closure risk.
Still, investors remain cautious. After a brief ceasefire announcement, markets rallied on Tuesday. The Dow Jones Industrial Average (DJI) rose 1.2%, the S&P 500 (SPX) climbed 1.1%, and the Nasdaq Composite (IXIC) added 1.4%. But oil prices slid 5.1% as the ceasefire held, for now.
A single missile or naval skirmish, however, could reverse that sentiment in a flash.
Conclusion: U.S. Oil Stocks Poised to Outperform
With Iran’s threats to close the Strait of Hormuz still on the table, and oil markets increasingly sensitive to every headline, investors would be wise to keep a close eye on U.S.-centric energy plays. ConocoPhillips, EOG Resources, Occidental Petroleum, Devon Energy, and Chevron offer exposure to a potential crude price spike, without the geopolitical risks associated with operating in the region itself.
If oil prices explode higher, these five names could turn into portfolio saviors.
Small Cap News Movers & Winner Deep Dive – By WealthyVC.com
We scan over 10,000 publicly listed stocks across all seven North American exchanges to uncover the market-moving news that actually matters—focusing on high-quality, liquid, growth-oriented companies in sectors attracting serious capital, like AI, blockchain, biotech, and consumer tech.
Each week, we publish Small Cap News Movers, a curated roundup of small and micro-cap stocks surging on meaningful catalysts. We break down what’s driving the move, tap into rumors swirling on social media, and surface sharp insights from both industry experts and retail sleuths.
From this list, we select one standout stock for our Small Cap Winner Deep Dive, released the next day, where we take a closer look at the fundamentals, narrative, and technicals that suggest this winner could keep running.
Powered by our proprietary 4-element, AI-driven analysis system, our goal is simple: cut through the noise, remove the emotion, and help investors dominate the small-cap market with momentum-driven strategies—completely free.
Sign up for email alerts to get the moves before our social media followers.
Read Next: Is This Tiny Biotech Stock Ready for a Massive Breakout?
Join the Discussion in the WVC Facebook Investor Group
Do you have a stock tip or news story suggestion? Please email us at: invest@wealthyvc.com.
Disclaimer: Wealthy VC does not hold a position in any of the stocks, ETFs or cryptocurrencies mentioned in this article.
