Lee Heidhues 2.23.2022
People are destined make a profit in times of conflict. Call them profiteers or shrewd business people. Whatever the description there will be those who gain through human suffering.
Wall Street has cast a keen eye on the global energy markets while Russia struts the World stage in its moves against Ukraine.
Most prominent in the news is the controversial Nord Stream 2 pipeline running from Russia, under the Baltic Sea into Germany. Certification of the project has been halted by the German government. The Americans have imposed sanctions against Nord Stream 2.
This and other sanction actions are already impacting the global economy. Still, there will be those whose bottom line will be enhanced irrespective of any sanctions.
Excerpted from InvestorPlace 2.23.2022
President Joe Biden has confirmed that we have seen the beginning of Russia’s invasion of Ukraine. The eyes of the world remain on the small nation as Western economic powers levy sanctions against its much larger aggressor. The ramifications of the conflict are significant for both countries. Financial markets across the globe, too, are feeling the sting.
While many stocks are being pushed down, the oil and gas sector is enjoying a ride to the top. Crude oil prices are nearing $100 per barrel, pushing up many oil stocks. These prices haven’t reached triple digits since 2014.
Russia is one of the world’s largest oil and gas exporters. For the countries that rely on its supplies, these sanctions could mean trouble. As the Washington Post reports, much of Europe is dependent on Russian exports for heating homes and industrial buildings. Ryan Fitzmaurice, a commodity strategist at Rabobank recently speculated that further disruptions in Russia’s oil supply chain could indeed send prices up even further.
The Post also notes, though, that many analysts do not foresee significant disruptions in the oil supply chain. For an economy like Russia’s to simply shut down its extensive oil and gas operations would pose a significant expense. At this point, it is impossible to predict how Russia will react to these sanctions.
For as long as prices continue to rise, though, oil stocks will continue to benefit. Let’s take a closer look at the oil stocks to buy as the conflict persists.
One of America’s leading oil and gas producers, ConocoPhillips has already been hailed among the potential winners of the Russia-Ukraine conflict.
Based on production and proved reserves, it bills itself as the world’s largest independent exploration and production (E&P) company. Its holdings expand across 14 countries, encompassing much of Europe and parts of the Middle East. As InvestorPlace contributor Josh Enomoto describes, ConocoPhillips is “one of the biggest oil stocks levered to the upstream component of the energy supply chain.”
Devon Energy (DVN)
Another consistent winner of the American oil boom, DVN has enjoyed a better season so far than many of its larger peers such as COP and Chevron (NYSE:CVX). The Oklahoma-based company is primarily focused on the hydrocarbon exploration business. It has enjoyed bullish action since its reported earnings for the fourth quarter beat analyst expectations.
As InvestorPlace contributor Joel Baglole recently reported, this impressive start to the year saw several Wall Street institutions raise their price targets on DVN stock including Credit Suisse. “With proven oil reserves of 752 million barrels, Devon Energy is well-positioned to perform strongly,” Baglole wrote.
Earlier this month, MarketWatch reported that analysts were favoring Canadian oil producers. One name that stands out among the country’s growing field is Enbridge.
Based in Calgary, this company has carved out an impressive market share. In addition to its pipelines, Enbridge also boasts operations in natural gas utility operations. What some may not know, though, is that the company is responsible for transporting more than one-quarter of North America’s crude oil production. This means it moves more than 30% of the continent’s crude oil and as well as almost 20% of the United States’ natural gas. Enbridge is also interested in renewable energy, and its assets include a wind portfolio.