With Growing Fears of War, Keep an Eye on These Oil Ideas

Jan 30, 2023

Investors may want to keep an eye on oil stocks. 

Just moments ago, we learned that investors “have piled into petroleum futures and options at the fastest rate since the first successful coronavirus vaccines were announced in late 2020. China’s exit from a zero-COVID strategy, along with hopes the global economy can avoid a recession and low oil inventories, have contributed to an extraordinary wave of buying across the petroleum complex” as noted by Reuters.

Plus, there are heightened tensions with Iran.  

Reportedly, Israel launched a drone attack on a key defense facility in Isfahan. “Isfahan is also a known hub for Tehran’s missile industry and is where the Shahab medium-range missile — which has a range capable of hitting Israel — is assembled,” says the Times of Israel.

Also, according to the UK Express, Israel could be at war with Iran by summer, if Tehran doesn’t abandon its race for nuclear weapons. “This stark prediction by experts comes as Israel and the US signaled their preparedness last week with their largest joint military exercise in history. More than 7,000 US and Israeli troops took part in Exercise Juniper Oak, a live-firing war game which boasted more than 140 B52 bombers, fighter aircraft and Apache gunships.”

That, coupled with chaos over Russia and Ukraine could get ugly fast.

With that potential investors may want to keep an eye on Exxon Mobil, Chevron, Occidental Petroleum, and oil-related ETFs, such as:

SPDR Energy Select Sector ETF (XLE)

The last time we mentioned the XLE ETF, it traded at $81. It’s now u to 90, and still attractive. 

With an expense ratio of 0.10%, the XLE ETF provides exposure to companies in the oil, gas and consumable fuel, energy equipment and services industries, as noted by State Street SPDR. Not only does an ETF allow for diversification, you can buy it for less. 

SPDR S&P Oil & Gas Exploration & Production ETF (XOP)

The last time we spoke about XOP it traded at $146.  While it slipped to $141, it’s still attractive.  

With an expense ratio of 0.35%, the ETF provides exposure to the oil and gas exploration and production segment of the S&P TMI, which comprises the following sub-industries: Integrated Oil & Gas, Oil & Gas Exploration & Production, and Oil & Gas Refining & Marketing, as noted by State Street SPDR.  Some of its top holdings include Callon Petroleum, SM Energy Company, Devon Energy Corporation, EOG Resources, and ConocoPhillips.

iShares Global Energy ETF (IXC)

The last time we spoke about the IXC ETF, it traded at $38.  It’s now at $40.20, and also still attractive. The iShares Global Energy ETF seeks to track the investment results of an index composed of global equities in the energy sector. With an expense ratio of 0.40%, some of its top holdings include Exxon Mobil, Chevron Corporation, BP PLC, Total SA, and EOG Resources.  The IXC ETF has a current expense ratio of 0.40%.

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