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Sat, Jun 28, 2025, 9:42 AM 5 min read
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Oil prices paused their recent climb this week as tensions between Israel and Iran appear to be easing, and crucially, the Strait of Hormuz remains operational. However, given that both parties have already violated the terms of the U.S.-led ceasefire, it would be premature to assume that lasting stability will be achieved in the region.
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With the Middle East remaining a potential flashpoint, investors may want to stay prepared for renewed volatility in energy markets. In this context, established energy leaders such as ExxonMobil (XOM), Chevron (CVX), and ConocoPhillips (COP) offer a strategic way to maintain exposure to potential upside in oil prices amid geopolitical uncertainty.
These three energy giants could be the key to navigating volatility while gaining exposure to a potential oil price shock that would significantly boost earnings and revenues, despite its detrimental impact on international trade and consumer prices.
For many income-focused investors, ExxonMobil is a core holding. Its massive daily output of around 4 million barrels makes it one of the most reliable names in energy. Furthermore, its diversified portfolio, ranging from upstream exploration in places like Guyana to downstream refining, means it is not just banking on crude prices remaining high.
Recent moves, such as its $59.5 billion acquisition of Pioneer Natural Resources last year, have also significantly increased its Permian Basin output, positioning it to produce low-cost shale oil even if prices decline, as we saw this past week.
Recently, Exxon has been vocal about the Israel-Iran tensions, with CEO Darren Woods noting the Strait of Hormuz’s critical role in global oil flows, as approximately one-third of seaborne crude oil passes through it. If that chokepoint gets squeezed if tension re-escalates, Exxon’s global supply chain could face hiccups, but its ability to redirect through pipelines, such as Saudi Arabia’s to the Red Sea, should give it an edge.
Regardless, with a 42-year track record of uninterrupted annual dividend increases, Exxon has demonstrated its ability to navigate even the most challenging times in the sector, all while maintaining a reliable and growing dividend.
Currently, most analysts are bullish on XOM stock. The stock has a Moderate Buy consensus rating, based on nine Buy and six Hold ratings assigned over the past three months. No analyst rates the stock a sell. XOM’s average stock price target of $123.40 implies ~13% upside over the next twelve months.
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