This Sector Is Unexpectedly Crushing the Rest of the Market This Year

By Matthew Benjamin – Feb 14, 2026 at 12:45PM ESTKey PointsOil stocks are surging, and aggressive U.S. foreign policy is likely the primary driver.Artificial intelligence fatigue could also be pushing some investors into energy stocks.We’re bullish on these 10 stocks ›NYSEMKT: XLESelect Sector SPDR Trust - State Street Energy Select Sector SPDR ETFToday's Changeangle-down(0.69%) $0.37Current Price$54.35Price as of February 13, 2026 at 4:00 PM ETThe energy sector has soared in 2026, surprising many analysts.Late last year, energy was looking like the sector to avoid in 2026. That's because a global oil glut was sending oil prices lower, and oil stocks with them. In December, there were 1.4 billion barrels of "oil on the water" -- i.e., oil being shipped to a port or stored and waiting for a buyer. That was 24% more than the average for December from 2016 to 2024. As a result, West Texas Intermediate, the type of oil extracted from oilfields in the U.S., was trading in late December at about $57 a barrel, $15 below where it started the year. Brent, the benchmark for oil from Europe, Africa, and the Middle East, was priced at about $60 a barrel, also $15 below where it was at the beginning of 2025.In response to sagging oil prices, investors were dumping energy stocks and looking for 2026 winners elsewhere. Image source: Getty Images. Well, surprise, surprise. As of the second week of February 2026, the energy sector is leading the pack. And few saw it coming.

The State Street Energy Select Sector SPDR ETF (XLE +0.69%) is up 23% year to date, beating every other S&P sector and crushing the broad S&P 500, which is up less than 2% year to date. Several of the U.S. oil majors (the world's largest and most influential publicly traded oil companies) are soaring. Here are a few of the leaders: Stock 2026 year-to-date return (as of Feb. 11) ExxonMobil (XOM 1.03%) 29.3% Chevron (CVX +0.66%) 21.9% ConocoPhillips (COP +0.54%) 18.8% Data source: U.S. foreign policy is driving energy stocks higher What is driving these stocks (and almost all of the other stocks in the S&P 500 energy sector) to outperform the broader market so dramatically? Well, it's not exactly clear. But there are theories. One is that aggressive U.S. foreign policy is behind it. Since the U.S. military captured and detained Venezuelan President Nicholas Maduro on Jan. 3, many investors have begun to think that oil majors like Chevron and Exxon will now have access to Venezuela's oil reserves, which, at 19.4 billion barrels, are considered to be the world's largest. Indeed, Venezuela sits on a fifth of the world's proven oil reserves. The biggest oil companies could be given special access to Venezuelan oilfields by the Trump administration. Just as importantly, both companies have large, complex oil refineries on the U.S. Gulf Coast that can handle the heavy sour blend of oil that Venezuela produces. And Chevron already has operations in Venezuela. In addition, the White House has increased hostilities with Iran in recent weeks. It has already positioned one aircraft carrier group near that nation's coast and may be preparing to send another. Any kind of U.S. strike on or war with Iran would undoubtedly send global oil prices higher, at least temporarily, as Iran is a major energy producer and sits at an energy choke point, the Strait of Hormuz. ExpandNYSEMKT: XLESelect Sector SPDR Trust - State Street Energy Select Sector SPDR ETFToday's Change(0.69%) $0.37Current Price$54.35Key Data PointsDay's Range$53.81 - $54.5852wk Range$37.24 - $55.24Volume48M Other theories hold that as investors tire of putting money into artificial intelligence (AI)-related stocks, some fell back on energy stocks as a reliable long-term bet. But can the rally in energy stocks last? Personally, I would be careful investing too much here. It will take many years and much capital to get Venezuela's oil sector back to fully or even mostly operational. And any U.S. conflict with Iran, if it happens, would likely be very brief. Instead, a wait-and-see approach to energy stocks makes more sense.Read NextMay 7, 2024 •By Matt DiLallo3 Top ETFs to Buy in May to Cash In on Higher Oil PricesMay 4, 2024 •By Matt DiLalloThis ETF Lets You Invest in 1 of 2024's Best-Performing Sectors.

Can It Keep Winning?Feb 27, 2022 •By Rekah KhandelwalOil & Gas Stocks: Bull vs. BearOct 28, 2020 •By Matt DiLalloOil Prices Sink as Coronavirus Cases and Supplies RiseSep 4, 2020 •By Jason HallCrude Oil Is Crashing Again: Here's WhyMay 3, 2020 •By Jason HallOil Crash 2020: 5 Experts Share Their Best Advice for Investing in Oil Stocks Right NowAbout the AuthorMatthew Benjamin is a contributing Motley Fool stock market and investing analyst covering publicly-traded companies across all sectors. Prior to The Motley Fool, Matt was a senior markets expert at an investing newsletter in Baltimore, an editorial consultant to the World Bank and the International Monetary Fund (IMF), and an economics correspondent at Bloomberg News. He holds a B.A. from Bucknell University and an M.A. from New York University. Fun fact: Matt has met every Federal Reserve Chair from Paul Volcker through Jerome Powell.TMFMbenjamin68Stocks MentionedSelect Sector SPDR Trust - State Street Energy Select Sector SPDR ETFNYSEMKT: XLE$54.35 (+0.69%) $+0.37ExxonMobilNYSE: XOM$148.39 (1.03%) $1.54ChevronNYSE: CVX$183.60 (+0.66%) $+1.20ConocoPhillipsNYSE: COP$111.43 (+0.54%) $+0.60*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.