Geopolitical Tensions Are Pushing Oil Stocks Higher, But Can the Rally Last?

By Matt DiLallo – Mar 7, 2026 at 5:30AM ESTKey PointsOil prices have surged due to the war with Iran.Crude could continue to rally if the conflict impedes global oil supplies. Most oil companies expected oil to be much lower this year. The war with Iran has driven up oil prices, taking oil stocks up with them. Brent, the global crude oil benchmark, has rallied about 40% this year, rising from $60 to around $85 per barrel. That has fueled a more than 25% surge in the average oil company stock price this year. Here's a look at whether the rally in oil stocks can last. Image source: Getty Images. The outlook for oil prices Oil prices have surged this year due to the growing tensions with Iran, which has now boiled over into an armed conflict. The war with Iran threatens global oil supplies. In addition to being a major oil producer, Iran has retaliated by attempting to impede oil exports from the Persian Gulf. About 20% of global oil supplies flow through the Strait of Hormuz, which borders Iran. The country has attacked crude-carrying ships passing through that key chokepoint. It has also used drones to attack oil infrastructure throughout the region. These attacks have driven up tanker shipping rates and caused insurance carriers to cancel coverage. Additionally, several energy companies have had to cut or suspend production due to safety issues or a lack of storage. If Iran continues to impede the flow of oil out of the Persian Gulf or destroys key regional oil infrastructure, crude prices could top $100 a barrel. However, if there's a rapid de-escalation in the conflict, where Iran agrees to stop striking oil tankers in the Gulf, crude prices could begin deflating. Riding the crude oil rally The surge in crude prices is driving up oil company stock prices. For example, shares of U.S. oil and gas giant Occidental Petroleum (OXY +1.82%) have rocketed more than 30% while big oil behemoth ExxonMobil (XOM +0.34%) is up around 25%. Higher oil prices will enable these companies to make even more money. ExpandNYSE: XOMExxonMobilToday's Change(0.34%) $0.52Current Price$151.28Key Data PointsMarket Cap$630BDay's Range$149.98 - $153.7952wk Range$97.80 - $159.60Volume859KAvg Vol20MGross Margin21.56%Dividend Yield2.67% The uptick in crude prices is an unforeseen boon for these companies, which had initially expected oil prices to remain lower this year. Occidental Petroleum has focused on becoming more efficient and paying down debt in recent years to generate more free cash flow at lower prices. That strategy had the company on track to produce an additional $1.2 billion in free cash flow this year at the same oil price as last year. It will now make even more free cash flow now that oil is higher, which could continue boosting its stock. Meanwhile, ExxonMobil is in the midst of a multi-year strategy to grow its advantaged resources (lowest-cost and highest-margin), while continuing to execute its structural cost-savings initiative. Exxon's plan through 2030 would deliver double-digit annual earnings and cash flow growth at an average oil price of around $65 per barrel. Exxon would likewise make even more money if oil prices remain at or above current levels. Oil prices could continue rallying in the near term President Trump's current timeline is that the war with Iran will last four to five weeks, though he said it could go longer. The longer the war rages on, the more likely crude oil prices (and oil stocks) will continue rallying, since it likely means Iran will continue to target the oil industry in retaliation. However, a quick end to the hostilities could cause the rally to fade. Read NextMar 5, 2026 •By Reuben Gregg Brewer3 Things Energy Investors Need to Know About President Trump's Latest Tariff MovesMar 5, 2026 •By Matt DiLalloThe S&P 500 Just Hit a 3-Month Low, But Oil Stocks Are Surging.

Should Investors Join the Crude Oil Rally?Mar 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)About 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$151.28(+0.34%)+$0.52Occidental PetroleumNYSE: OXY$54.19(+1.78%)+$0.95*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.