Iran is intensifying its missile strikes on its neighbors’ energy infrastructure after its own facilities were hit by missiles. With President Trump vowing to “massively blow up the entirety” of Iran’s South Pars field, the world’s largest natural gas field. As the hostilities intensify, oil prices are spiking and consumers are paying higher gas prices at the pump: average pump prices hit $3.88 a gallon nationally, up from $2.92 just one month ago.
While the administration calls this temporary pain for long-term gain, there are energy stocks that can profit from the situation today. Chevron (CVX) just might be the best opportunity today.
Robust Operations Fuel Resilience
Chevron stands as one of the world’s largest integrated energy majors, with a balanced portfolio spanning upstream exploration and production, midstream logistics, downstream refining, and chemicals. This year, the energy giant is allocating $18 billion to $19 billion in capital expenditures, with the bulk directed toward high-return U.S. shale assets in the Permian Basin and world-class offshore developments in Guyana’s Stabroek Block.
Production has reached record levels, exceeding 3.7 million barrels of oil equivalent per day in recent quarters, driven by efficient shale drilling and massive Guyana expansions that boast some of the industry’s lowest costs. This diversification shields CVX from regional disruptions while positioning it to capture global supply shocks – precisely the environment unfolding now as Iranian attacks disrupt Gulf energy flows and threaten the Strait of Hormuz.
Positioned for Maximum Upside in Surging Markets
The current crisis plays directly into Chevron’s strengths. Higher crude prices flow straight to the bottom line through its vast upstream output, where assets like Guyana deliver breakeven costs around $35 per barrel. Refining margins expand as gasoline and diesel prices at the pump surge, allowing CVX to profit on both ends of the barrel. Unlike pure upstream players exposed to volatility, Chevron’s integrated model generates robust free cash flow even in stressed markets.
Analysts note the company’s disciplined hedging and cost controls amplify gains when Brent prices exceed $90, and they just hit $114 per barrel. With output growth projected at 7% to 10% for 2026, every dollar higher in oil translates into billions in additional cash flow for reinvestment or returns.
Proven Dividend Aristocrat with Low Breakeven Protection
Financial resilience is Chevron’s hallmark. The company has raised its dividend for 39 consecutive years, most recently hiking the quarterly payout 4% to $1.78 per share in January – yielding 3.6%. Its portfolio-wide dividend-plus-capex breakeven sits comfortably below $50 per barrel Brent through 2030, providing a massive cushion.
Even at today’s elevated prices, coverage remains strong, with operating cash flow easily funding dividends, buybacks, and growth. This track record of consistent increases through multiple oil cycles underscores CVX as a reliable income generator, not just a speculative play on geopolitics.
Bottom Line
While the higher pump prices are hurting consumers, there’s no reason investors shouldn’t try to offset the pain by buying stocks that will profit to the benefit of their portfolios. Chevron offers exactly that blend of immediate upside from the oil spike, long-term production growth, rock-solid finances, and a growing dividend.
— Rich Duprey
Karim Rahemtulla, the trader behind a 400% gain in 24-months on Rolls-Royce, has uncovered another potential multi-bagger. This under-$20 stock gives you exposure to over 1-oz of gold with the lowest production costs in the industry. And an upcoming announcement could send this stock soaring. Get Karim's urgent briefing - click here now.
Source: Money Morning
