Current Strategy on Soaring Oil Prices
I believe shares of Chevron could be the best strategically justified investment option on jumping oil prices. In the recent months, which preceded the Middle East conflict, the stock has proven itself as one of the most consistent assets among the world's energy segment leaders. Even at crucial moments of oil price declines in late spring and early summer of this year, the market discount for Chevron was not as big as it was for Exxon Mobil or BP.
Being the world’s No. 2 hydrocarbon producer, Chevron has some links in the region. The company had to shut down the Tamar gas field near the northern coast of Israel after the hot military confrontation was launched. However, it is a very small part of Chevron's business interests, when soaring crude prices automatically help oil producing corporations all over the world to line their pockets.
Even if other Gulf countries may successfully avoid being embroiled in direct or indirect battle, and oil export routes including the Strait of Hormuz bottleneck remain untouched, the current price spikes may fade, but oil producers would have enough time to earn additional money. This is why it seems to me that any bets on the energy segment of the stock market would be less risky, and also potentially more profitable at the same time, than buying oil contracts. Reuters already shared some leaks from unnamed sources that Venezuela and the U.S. have progressed in informal talks, which could provide sanctions relief to Caracas by allowing at least one additional foreign oil firm to take Venezuelan crude oil for debt repayment. Saudi production may also add to global volumes, if only fuel prices go much higher.
The capitalization of Chevron just added 2.77% this Monday, while the stock was $22.5, or about 12%, below its highs of November 2022, and approximately at the same distance from its lowest points of June 2023.
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