3 Oil Stocks to Buy As Crude Oil Prices Keep Rising High

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Oil stocks continued to soar as markets reacted to Russia’s ongoing invasion of Ukraine and the prospect of US allies joining Washington in banning Russian oil.

West Texas Intermediate (WTI) crude futures, the US oil benchmark, recently hit $130. The international benchmark, Brent crude, hit a high of $139.13, also its highest level since 2008, before retreating to $125.

The soaring prices came as the Biden administration announced a ban on Russian oil and natural gas, increasing pressure on European allies to do the same.

And while soaring energy prices are tough on consumers (the average for a gallon of gas in the US now exceeds $4), it’s good for oil producers and their stocks. Here are three stockpiles of oil to buy as crude prices continue to soar higher.

• Western petroleum (NYSE:OKSI)
• Shell (NYSE:SHEL)
• Imperial Oil (NYSEAMERICA:IMO)

Oil Stock: Occidental Petroleum (OXY)

Houston-based Occidental Petroleum has been doing well this year, having gained 75% since early January to around $55. However, news that legendary investor Warren Buffett has taken $5 billion in OXY stock even as the stock price continues to rise has further boosted confidence in the oil exploration and manufacturing giant.

Buffett’s parent company, Berkshire Hathaway (NYSE:BRK.ANYSE:BRK.B) now owns 91.2 million common shares of Occidental Petroleum, valued at approximately $5.1 billion. Berkshire Hathaway owns nearly 10% of Occidental’s common stock. But it also has warrants to buy another 83.9 million shares for $59.62.

In addition to rising oil prices, Buffett is also likely to be interested in OXY shares with an 8% annual dividend that the company pays. With the dividend yield, Berkshire Hathaway will receive a quarterly payment from Occidental Petroleum worth $200 million. Not too bad.

Leather (SHEL)

UK-based Shell, which is one of the world’s half a dozen “supermajor” oil producers, has found itself in the middle of a public relations crisis over revelations that it had increased purchases of Russian oil, buying it at discounted prices, following the invasion of Ukraine. Shell said in a written statement that its decision to buy Russian oil at a discount was “difficult,” confirming that it had purchased cargoes of Russian crude on March 4.

While politicians debate cutting Russian energy products, most private sector buyers are already avoiding Russian oil and natural gas. According to an analysis by JPMorgan, 66% of Russian oil is struggling to find a buyer in the current market. Russia is the world’s second-highest producer of crude after Saudi Arabia, and supplies about a third of Europe’s needs. Shell said it was forced to buy oil from Russia to maintain timely supplies of fuel across Europe.

Despite the controversy, SHEL shares have performed well this year as world oil prices continue to rise. In the past six months, Shell’s share price has risen 28%, including a 15% gain so far in 2022. Shell shares are now trading at $53 per share.

Oil Stock: Imperial Oil (IMO)

One of the big beneficiaries of the crisis in Europe and the current pressure on oil prices is neighboring Canada. As the largest exporter of clean energy and the largest supplier of crude oil to the US, Canada is home to the world’s third-largest oil reserves.

Countries looking to cut Russian crude supplies are increasingly looking north to Canada as a more stable and reliable supplier. And that’s good news for Canadian oil stocks, especially Imperial Oil.

This year, IMO shares are up 27%, bringing their gains over the past year to 92%. At around $45 per share, Imperial Oil shares continued to climb to new highs. Today, Imperial Oil is the second largest integrated oil company in Canada. And majority owned by American oil giant ExxonMobil (NYSE:XOM)which holds nearly 70% of Imperial Oil.

Any attempt to increase the supply of oil from Canada will surely benefit Imperial Oil and its shareholders.

As of the date of publication, Joel Baglole does not have (either directly or indirectly) a position in the securities mentioned in this article. Opinions expressed in this article are those of the author, subject to InvestorPlace.com Publishing Guidelines.

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