Oil companies do more than drill. The industry includes producers that pull oil out of the ground, refiners that turn crude into gasoline and jet fuel, and pipeline companies that move energy around and collect toll-like fees.
That diversity matters because each part of the oil chain wins and loses in different environments.
If you want exposure to oil, the goal shouldn’t be “pick the stock that benefits most if oil spikes.” It should be to own businesses that can survive the down cycles and still reward shareholders.
Top oil stocks to consider
| Name and ticker | Market cap | Dividend yield | Industry |
|---|---|---|---|
| ConocoPhillips (NYSE:COP) | $160.9 billion | 2.46% | Oil, Gas and Consumable Fuels |
| Devon Energy (NYSE:DVN) | $30.8 billion | 1.93% | Oil, Gas and Consumable Fuels |
| Enbridge (NYSE:ENB) | $117.3 billion | 5.09% | Oil, Gas and Consumable Fuels |
| ExxonMobil (NYSE:XOM) | $680.7 billion | 2.47% | Oil, Gas and Consumable Fuels |
| Phillips 66 (NYSE:PSX) | $71.1 billion | 2.75% | Oil, Gas and Consumable Fuels |
| Chevron (NYSE:CVX) | $396.8 billion | 3.47% | Oil, Gas and Consumable Fuels |
| EOG Resources (NYSE:EOG) | $76.7 billion | 2.79% | Oil, Gas and Consumable Fuels |
Here’s a closer look at these top oil stocks.
1. ConocoPhillips
NYSE: COP
Key Data Points
2. Devon Energy
NYSE: DVN
Key Data Points
Dividends Per Share
3. Enbridge
NYSE: ENB
Key Data Points
4. ExxonMobil
NYSE: XOM
Key Data Points
NYSE: PSX
Key Data Points
NYSE: CVX
Key Data Points
NYSE: EOG
Key Data Points
Types of oil stocks
There are several subsectors within the oil industry.
- Exploration and production (E&P) stocks: These are the companies that find and extract hydrocarbons.
- Oilfield services stocks: Companies that provide support, equipment, and services to oil and gas exploration and production companies. Services include drilling, seismic testing, well maintenance, and equipment manufacturing.
- Refining stocks: These are companies that process crude oil into usable products like gasoline, diesel, and jet fuel.
- Integrated oil company stocks: These are companies that operate across the entire oil and gas value chain, including exploration, production, transportation, refining, and marketing the finished product.
- Master limited partnerships (MLPs): These are publicly traded partnerships that own and operate energy infrastructure assets, such as pipelines, storage facilities, and refineries. A key feature is their pass-through tax status, which avoids corporate-level income taxes, though investors are taxed on their share of the income.
How to analyze oil stocks
The oil industry is inherently risky for investors. Although each segment of the industry has its own set of risk factors, the oil business is both cyclical and volatile.
Oil demand generally tracks economic growth. A robust economy can support rising oil prices and producer profitability. However, geopolitics and capital allocation also play crucial roles in the industry.
The world's largest oil-exporting nations include members of OPEC (Organization of the Petroleum Exporting Countries), a cartel that coordinates members' oil policies. OPEC's actions can significantly affect oil prices. It can withhold supply to push prices higher or increase its output to drive them lower. OPEC has wielded its power over the years, causing massive fluctuations in oil prices.
Meanwhile, independent oil companies can also affect oil prices. If they allocate too much capital to new projects, they can cause an oversupply and weigh on prices. If they hold back too much, they can cause prices to surge. Since oil and gas assets are developed over a long time, companies cannot quickly increase their supplies in response to favorable market conditions.
Given the volatility of oil prices, an oil company must have three crucial characteristics to survive the industry's inevitable downturns:
- A strong financial profile with an investment-grade bond rating, significant amounts of cash on hand or ample access to affordable credit, and manageable, well-structured debt maturities.
- Low operating costs or relatively stable cash flow streams. E&P companies need to be able to sustain operations profitably; in 2025, that meant oil prices of nywhere from $30 per barrel for conventional wells to $75 for oil sands. Midstream companies should get more than 85% of their cash flow from steady revenue sources such as fee-based contracts. Downstream companies should have operating costs below the industry average.
- Diversification. Oil companies should operate in more than one geographical region or be at least partially vertically integrated by engaging in several different activities.
Benefits and risks of investing in oil stocks
No investment is without risk. Investors should understand both the upside and the concerns before jumping into the oil patch.
Energy markets are notoriously cyclical, and oil is extremely sensitive to supply and demand trends. Even a slight imbalance between supply and demand can cause the oil market to go haywire.
- When times are good and energy demand is high, prices tend to rise. Investors can also benefit if supply disruptions cause prices to rise.
- But when demand softens, or supply expands, oil prices tend to move dramatically lower. That can lead to periods when younger, less-established companies run into trouble and have to raise capital quickly or face a liquidity crunch.
Geopolitical issues can also affect oil prices. Conflict in the Middle East tends to cause oil prices to jump because of supply concerns, for example.
Because of this dynamic, investors need to be careful when choosing oil stocks. They should focus on companies that can survive rough patches since they'll be better positioned to thrive when markets turn healthy again.
How to invest in oil stocks
- Open your brokerage app: Log in to your brokerage account where you handle your investments.
- Search for the stock: Enter the ticker or company name into the search bar to bring up the stock's trading page.
- Decide how many shares to buy: Consider your investment goals and how much of your portfolio you want to allocate to this stock.
- Select order type: Choose between a market order to buy at the current price or a limit order to specify the maximum price you're willing to pay.
- Submit your order: Confirm the details and submit your buy order.
- Review your purchase: Check your portfolio to ensure your order was filled as expected and adjust your investment strategy accordingly.
Common mistakes to avoid when investing in oil stocks
Oil is a cyclical commodity. Many of these companies look like great investments when oil prices are high, but less so when prices fall. One common mistake investors can make is ignoring oil price trends, leading to an unpleasant decline.
Other common mistakes to avoid:
- Inadequate diversification: Never put too much of your nest egg into one company or one type of company, especially if it is in a cyclical sector.
- Chasing yields: Some stocks look like they pay eye-watering dividends. Before buying in, you should ensure the dividend is sustainable.
- Timing the market: Although oil prices do ebb and flow, strong companies can outperform over time. Trying to guess the future price of oil and jumping in and out of a stock based on those predictions will likely lead to underperformance compared to just sticking to long-term investments in quality companies.
Related investing topics
FAQ
Oil stocks FAQ
About the Author
Lou Whiteman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple, Chevron, Enbridge, and Phillips 66. The Motley Fool recommends ConocoPhillips and EOG Resources. The Motley Fool has a disclosure policy.
