The S&P 500 Just Hit a 3-Month Low, But Oil Stocks Are Surging. Should Investors Join the Crude Oil Rally?

By Matt DiLallo – Mar 5, 2026 at 8:00AM ESTKey PointsThe war with Iran has driven up crude prices. Oil could continue rallying if Iran impacts global oil supplies or fall if there's a de-escalation in the conflict. Oil giants Chevron and Exxon offer upside to higher prices, while still thriving if they fall. The S&P 500's rally has fizzled out this year. It recently dropped to three-month low, giving back all its gains for 2026. One factor weighing on the broader market index is the rally in crude oil prices, fueled by the war with Iran. Surging crude prices have driven up oil stocks this year. Here's a look at whether investors should join in the rally and buy oil stocks. Image source: Getty Images. Oil prices are up, and could continue rallying WTI, the primary U.S. oil price benchmark, has rocketed nearly 30% this year to around $75 per barrel. The sole catalyst is the conflict with Iran. The country is a major global oil producer. On top of that, it's trying to stop the flow of oil out of the Middle East in retaliation against military strikes within the country. Around 20% of global supplies move through the Strait of Hormuz in the Persian Gulf. Iran is trying to prevent oil from moving through this narrow part of the Gulf by launching direct attacks on crude transport ships. It has also threatened to attack the oil infrastructure of neighboring Gulf nations. The U.S. is working to ensure oil continues to flow through the Gulf. The U.S. government has offered to provide insurance after carriers canceled policies and is considering using the Navy to escort ships through the Strait. If oil continues to flow from the Gulf, it should help keep crude prices from rising further. However, if Iran impedes shipments or severely damages oil infrastructure in the Gulf, crude prices could soar to more than $100 a barrel. The safest oil stocks to buy in the current environment There's a lot of uncertainty in the oil market these days. Given these conditions, investors should focus on the safest oil stocks. The top tier includes big oil behemoths ExxonMobil (XOM +0.71%) and Chevron (CVX +2.06%). They boast large-scale, globally integrated operations. Both have an abundance of low-cost supplies and fortress balance sheets. As a result, both expect to thrive in the coming years, even if oil prices cool off. ExpandNYSE: XOMExxonMobilToday's Change(0.71%) $1.06Current Price$150.88Key Data PointsMarket Cap$624BDay's Range$149.48 - $152.2952wk Range$97.80 - $159.60Volume855KAvg Vol20MGross Margin21.56%Dividend Yield2.70% For example, Exxon's plan to 2030 would see the oil giant grow its earnings at a 13% average annual rate while delivering double-digit cash flow growth. Exxon can achieve that high-octane growth rate at an average oil price of $65 per barrel. The company's plan relies on its industry-leading cost-savings initiatives and a large pipeline of high-return major growth capital projects. Chevron also has a strong growth profile. It expects to produce an additional $12.5 billion of free cash flow this year at an average oil price of $70 a barrel, fueled by recently completed expansion projects and its acquisition of Hess. Meanwhile, Chevron expects to deliver more than 10% annual free cash flow growth through 2030 at $70 oil, driven by additional expansion projects and its cost-savings initiatives. Tread carefully Oil prices could keep soaring or give back some of their recent gains, depending on what happens in the Middle East. Given this uncertainty, investors seeking to join the rally should focus on the safest oil companies, Exxon and Chevron. They offer upside potential to rising oil prices, while still able to thrive if oil cools off.Read NextMar 5, 2026 •By Reuben Gregg Brewer3 Things Energy Investors Need to Know About President Trump's Latest Tariff MovesMar 3, 2026 •By Matt DiLallo3 Top Oil Stocks to Buy in MarchMar 2, 2026 •By Eric VolkmanWhy ExxonMobil Group Stock Bumped Higher TodayFeb 27, 2026 •By Courtney CarlsenWant Decades of Passive Income? 3 Energy Stocks to Buy Right NowFeb 22, 2026 •By Reuben Gregg BrewerExxonMobil Stock Surged 17% in January -- Here's What Drove the Rally (and What You Really Need to Focus On)Feb 20, 2026 •By Courtney CarlsenAll It Takes Is $10,000 in ExxonMobil to Generate Hundreds in Annual Passive IncomeAbout the AuthorMatt DiLallo has been a contributing Motley Fool stock market analyst specializing in covering dividend-paying companies, particularly in the energy and REIT sectors, since 2012. He also covers pre-IPO companies, ETFs, and other investing topics. He holds an MBA from Liberty University.TMFmd19X@MatthewDiLalloStocks MentionedExxonMobilNYSE: XOM$150.88(+0.71%)+$1.06ChevronNYSE: CVX$189.90(+2.08%)+$3.87*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.