Oil Stocks Are Soaring, But Here Are 3 Considerations For Investors Before They Buy

By Reuben Gregg Brewer – Mar 17, 2026 at 5:15PM ESTKey PointsOil prices are notoriously volatile.Before you buy oil stocks because of rising oil prices, make sure you consider the downside risk.Oil prices have risen sharply amid escalating geopolitical tensions in the Middle East. There are very real reasons for the price spike, given that the energy markets have been materially disrupted by recent events. However, make sure you consider these three facts before buying oil stocks simply because oil prices are on the rise. 1. Oil is an inherently volatile commodity Wall Street has a very short memory, with investors often swept up by short-term events that history shows are unlikely to last. Today's rising oil and natural gas prices are one very poignant example. While it is true that higher oil prices will likely result in strong earnings for energy companies, the industry's history is filled with periods where dramatic commodity declines have led to exactly the opposite outcome. Image source: Getty Images. Buying just because oil prices are high is not a great plan for a long-term investor. You will most likely end up buying at elevated valuations. 2. Diversification has its benefits If you are still intent on buying an energy stock today, you have to understand that there are different ways to get that exposure. For example, Devon Energy (DVN +1.65%) is a pure play North American energy producer. It is insulated from the direct physical impact of the geopolitical conflict and will benefit directly from rising oil prices. However, it will also be hit hard if, more likely when, oil and gas prices decline. A better choice would be a diversified business like Chevron (CVX +0.61%). Chevron is an integrated energy company. It produces oil and natural gas, it transports these commodities, and it processes them. The company also has geographic diversity, with assets spread around the world. And it has one of the strongest balance sheets in its peer group. Notably, the stock's dividend has been increased annually for decades. If you are inclined to buy an energy stock today, Chevron has proven it can survive through the full energy cycle while still paying investors well along the way. ExpandNYSE: CVXChevronToday's Change(0.61%) $1.21Current Price$198.05Key Data PointsMarket Cap$393BDay's Range$196.50 - $200.5552wk Range$132.04 - $200.55Volume497KAvg Vol12MGross Margin14.66%Dividend Yield3.51% 3. You can play a different game That said, you can sidestep energy prices and still invest in the energy sector by buying a midstream business like Enterprise Products Partners (EPD +0.56%). This pipeline operator collects fees for moving oil and gas around the world, with demand for energy being a more important driver of its results than commodity prices. The lofty 5.8% yield will account for most of your return over time, but a boring income investment will likely be a better fit for many investors when it comes to energy stocks. In the end, history suggests that buying an energy stock just because of high oil prices is a risky move. It is much better to take a full-cycle view of the sector and invest accordingly in diversified companies, like Chevron, and businesses that don't depend as heavily on commodity prices, like Enterprise.Read NextMar 16, 2026 •By Austin Smith2 No Brainer Energy Dividend Stocks to Buy As Oil Tops $100Mar 13, 2026 •By Daniel FoelberHere Are My Top 3 High-Yield Dividend Stocks to Buy NowMar 13, 2026 •By Sean WilliamsWarren Buffett Wrapped Up His Illustrious Investing Career by Selling 50% of His Bank of America Stake and Piling Around $1.2 Billion Into This Scorching-Hot Oil StockMar 11, 2026 •By Reuben Gregg BrewerWhere Will Chevron Be in 1 Year?Mar 10, 2026 •By Reuben Gregg BrewerHere's Why Oil Prices Are Surging Right NowMar 7, 2026 •By Bram BerkowitzNew CEO Greg Abel Did Not List 2 of Berkshire Hathaway's Largest Equity Positions as "Core Holdings." Are They on the Chopping Block?About the AuthorReuben Gregg Brewer is a contributing Motley Fool stock market analyst covering energy, utilities, REITs, and consumer staples. He is the former director of research at Value Line Publishing, where he rose from mutual fund analyst to equity analyst before leading all research operations. Reuben holds a bachelor’s degree in psychology from SUNY Purchase, a master’s in social work from Columbia University, and an MBA from Regis University. He has been featured as a financial expert on CNBC and in the Financial Times, Barron’s, and InvestmentNews.TMFReubenGBrewerStocks MentionedChevronNYSE: CVX$198.05(+0.61%)+$1.21Devon EnergyNYSE: DVN$47.42(+1.65%)+$0.77Enterprise Products PartnersNYSE: EPD$37.53(+0.56%)+$0.21*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.