It has been almost seven weeks since the U.S. and Israel initiated strikes against Iran, triggering significant upheaval in global energy markets. The situation has particularly affected the vital Strait of Hormuz, where traffic has been disrupted by actions from both Iran and the U.S.
While there is hope that a peaceful resolution might be reached soon, the likelihood of securing a lasting agreement that satisfies all involved parties remains uncertain. For investors navigating this turbulent environment, here are three highly regarded energy stocks attracting Wall Street’s attention as the crisis in Iran continues to affect oil markets.
1. Chevron
Chevron (CVX 1.13%) emerges as a favored option among Wall Street analysts given the current uncertainties. The company’s robust operations in the U.S. Permian Basin make it a strong contender when oil supplies from the Middle East are threatened.
In addition to the Permian Basin, Chevron also plays a significant role in the Gulf of Mexico, with oil production in the Bakken and Denver-Julesburg Basins. Its international operations extend to areas like Argentina and Guyana, well away from the Middle Eastern region.
2. ExxonMobil
Analysts have a favorable view of ExxonMobil (XOM 0.05%) for reasons similar to those supporting Chevron. However, ExxonMobil boasts broader global operations, making it the second-largest energy company globally by market cap, trailing only behind Saudi Aramco.
The company has consistently outperformed its peers in the energy sector over recent years regarding total shareholder returns, while also showcasing superior cash flow growth and a solid balance sheet.
3. Energy Transfer
In addition to large oil enterprises like Chevron and ExxonMobil, analysts are also keeping tabs on midstream energy leader Energy Transfer (NYSE: ET). Among 21 analysts surveyed by S&P Global (NYSE: SPGI) this month, 18 labeled the pipeline stock as a “buy” or “strong buy.”
While Energy Transfer’s operations are not directly tied to fluctuating oil and gas prices, the supply disruptions in the Middle East have spurred an uptick in demand for U.S. oil and gas, which benefits the company significantly.
With over 140,000 miles of pipeline across the U.S., Energy Transfer handles around 32 million BTUs of natural gas and 7 million barrels of crude oil daily. Furthermore, it fractionates approximately 1.1 million barrels of natural gas liquids (NGLs) every day. The company currently offers a distribution yield of 7.1% and anticipates annual distribution growth of 3% to 5% in the long run.
