ExxonMobil (XOM 0.29%) stock is up almost 18% in 2026, even as the S&P 500 index is essentially flat. The move stems from the spike in oil prices driven by the conflict in the Persian Gulf. Still, the question is whether ExxonMobil is still worth holding now. Here are the bull and bear cases for the stock.
The bulls' case for ExxonMobil
The most optimistic case for the stock rests on the idea that the market is underestimating the potential for a "higher for longer" oil price. A previous analysis of oil futures suggests the market believes the impact of the conflict on oil prices will be relatively short-lived, with a return to muhc lower prices by autumn.
NYSE: XOM
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That view may prove too optimistic, as the conflict is far from resolved, the strait is blockaded, and, although it's in almost everybody's interest to reopen it, there's no agreement on the conditions for its reopening. There's also major doubt about insurance coverage for shipping companies and cargo owners; there is no clarity yet on the full extent of energy infrastructure in the region or the risk premium that energy customers will now place on buying from countries in the Arabian Peninsula.
Given all that, bulls say, ExxonMobil should be included in a list of no-brainer stocks to buy while the Strait of Hormuz is closed.
The bears' case for ExxonMobil
The bears are divided into two camps. The first believes the oil futures market is correct and that oil prices will decline significantly in the coming months. If they do, then buying ExxonMobil for what's likely to prove to be a quarter or two of relatively high prices would be a mistake.
The second camp includes investors sympathetic to the bulls' argument that oil prices will stay "higher for longer" but who don't see ExxonMobil as necessarily the best way to play the theme. After all, ExxonMobil has exposure to Qatar (a country in the Arabian Peninsula and the leading liquefied natural gas, or LNG, exporter through the Strait) through its LNG investments.
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In addition, ExxonMobil's downstream operations rely more on the spread between crude oil and refined product prices than on movements in oil prices. Furthermore, absent a rise in energy prices, ExxonMobil is essentially a low-growth, relatively-low-return-on-equity business, and it could struggle to raise production significantly even if prices rise.
Is ExxonMobil stock a buy?
I think the second group in the bears camp is probably right. While it absolutely makes sense to protect against downside risk from the conflict in the Gulf, investing in ExxonMobil is probably not the best way to do so. For those asking what is, I'd say something like Australian oil and LNG provider Woodside Energy Group.
According to S&P Global Market Intelligence, Wall Street analysts expect ExxonMobil's earnings and cash flow to grow at a low-single-digit rate over the next five years. That means the stock needs a higher oil price to justify buying its 2.7% dividend yield right now.
