What happened
News that the U.S. would ban oil imports from Russia sent energy prices sharply higher on Tuesday. Many oil and gas businesses saw their stock prices rise along with them.
Here's how the shares of several major energy companies were performing as of 3 p.m. ET:
- Chevron (CVX 0.31%), up 6%.
- BP (BP 0.19%), up 5%.
- NOV (NOV -0.37%), up 3%.
- Phillips 66 (PSX -0.46%), up 2%.
- ExxonMobil (XOM 0.09%), up 1%.
So what
Conflict in Ukraine has led governments in the U.S., Europe, and other areas to impose economic sanctions on Russia in an attempt to restore peace and stability to the region. Up until today, those sanctions have largely excluded energy imports due to the steep toll that banning the sale of oil and gas from one of the world's largest producers could have on the global economy.
Image source: Getty Images.
Yet, while higher oil and gas prices can dent global economic growth, they tend to boost the profit margins of many energy-related businesses. Exploration and production companies like Chevron, Exxon, and BP will typically realize higher profits on the oil and gas they sell. Equipment providers like NOV, meanwhile, will often experience higher demand for the components and services they offer.
Now what
The European Union also plans to cut its member nations' imports of Russian energy by the end of the year. This could drive energy prices even higher in the months ahead.
Investors seeking shelter from the economic storm these events could unfortunately bring about may want to consider adding some oil and gas stocks to their diversified portfolios.
