Oil Prices Spike as War LOOMS in Middle East.

On Friday, Israel launched airstrikes into Iran targeting multiple areas.

The attack sent shockwaves throughout the financial markets.

At one point, the DOW was down almost 900 points!

The price of oil spiked over 8% following the attack.

Right now the conflict looks to be escalating - here’s the most recent news from CNN.

About one-third of all oil production is from the Middle East, and everyone is concerned a larger conflict in the region will hurt oil production.

Less oil in the market means oil prices will rise.

It’s simple supply and demand.

If oil prices rise too far, it’s really bad news for the US economy.

Oil is the largest energy source in the United States and fuels our homes, businesses, and transportation.

And energy prices have a huge impact on inflation.

Just look at the following chart:

Energy prices spiked in 2021 and 2022, which was a major factor in the high inflation we experienced.

Inflation has cooled significantly recently, falling to 2.4% in May.

The main driver for lower inflation is a large drop in the price of oil.

If the Israeli-Iranian conflict escalates, it’ll cause inflation problems here at home.

The biggest winners, from a stock market standpoint, are oil companies.

Higher oil prices mean they get more money pulling black gold from the ground.

I see these oil companies benefiting the most:

ConocoPhillips (ticker: COP) recently finished its acquisition of fellow oil exploration and production (E&P) company Marathon Oil.

ConocoPhillips is also one of the most undervalued E&P companies, with a price/book of only 1.8x.

Its price/book is currently more than 25% lower than its five-year historical average, so it now presents a really interesting buying opportunity.

Warren Buffett loves Occidental Petroleum (ticker: OXY), another oil E&P company.

Buffett has been increasing his position in Occidental, buying up over 9 million shares since last December.

And Buffett might be onto something.

Occidental is up over 25% since early April, which is more than double the rise in the overall energy sector.

Halliburton (ticker: HAL) is another company benefiting from the spike in oil prices.

Halliburton is North America’s largest oil service provider.

Higher oil prices mean it’s more profitable for Halliburton’s customers, like ConocoPhillips and Occidental, to explore for and produce more oil.

More oil exploration and production means more demand for Halliburton’s equipment, making the process easier.

What other oil companies are you buying up right now?

Send me your list!