What happened

Oil stocks were gaining broadly today as the stock market jumped to start the fourth quarter, and as the price of oil rose on signs that OPEC+, which includes Russia, may cut its daily production.

Crude oil futures rose 5% on the day, and Treasury yields were down sharply in response to the U.K.'s plan to reverse a tax cut and on news that Credit Suisse's financial health could be in doubt. With the 10-year Treasury yield falling 4%, stock prices soared as falling yields tend to be bullish for stock prices, especially as investors have been nervous about rising interest rates.

Responding to the increase in oil prices and broader bullish momentum, ExxonMobil (XOM -0.88%) closed up 5.3%; Phillips 66 (PSX 0.09%) gained 4.8%, and Marathon Oil (MRO -0.25%) jumped 10.6%. 

So what

Last night, news sources reported that OPEC+ was considering a cut of 1 million barrels a day, a move that could stem falling oil prices, which have been declining on concerns about a recession in the U.S. and other parts of the world.

OPEC+ produces about 28 million barrels of oil a day, so a cut of 1 million barrels is only modest, but was still enough to give oil prices a boost, largely because the consortium of many of the world's biggest oil producers has significant influence over oil prices. If OPEC+ is already mindful of falling prices, that's good news for oil stocks.

ExxonMobil's stock responded favorably to the news. The oil major is the world's largest refiner and marketer of oil, and about two thirds of the company's energy production comes from oil, including a substantial amount of higher-cost bitumen, which comes from oil sands. 

Exxon's stock has had a blockbuster year, with the stock up 51% year to date, and the company posted bumper profits in its most recent quarter, with $17.9 billion in net income, showing how much cash the company can spin off when oil prices are elevated. Look for the stock to continue to gain if crude prices creep higher. 

Phillips 66 doesn't produce oil. Instead, the company transports it and buys it to refine into products like gasoline or to make chemicals. Because it's not a producer, Phillips 66 isn't as exposed to the price of oil as Exxon or upstream oil companies, but it still benefits from rising oil prices. That's because the market crack spread, or the difference between the price of crude oil and the price of refined products, tends to get bigger as oil prices go up.

Phillips has also seen profits jump, posting $930 million in free cash flow in its most recent quarter, and the stock price is up 17% year to date.

Finally, Marathon Oil is an exclusively upstream oil company, meaning it has the most exposure to the price of crude oil out of these three stocks. The exploration and production company saw revenue double in its most recent quarter from a year ago, largely due to the jump in the price of oil.

On the bottom line, its net income soared from $16 million to $966 million. Though crude oil prices fell in the third quarter, the company should still turn in a strong profit in its upcoming report. It also said it targets returning a minimum of 40% of operating cash flow to investors in an environment where West Texas Intermediate crude oil is at $60 a barrel or higher. Year to date, the stock is up 52%.

Now what

The price of oil is notoriously unpredictable, and a wide range of events can impact it, including natural disasters, geopolitical tensions, a slowdown in economic growth, and political decisions, including those by OPEC+.

While the threat of a recession in the U.S. and other parts of the world could continue to pressure oil prices lower, it's clear that these three companies, especially exploration and production companies like Marathon Oil, will win on higher oil prices.