Oil Surged 70% in 26 Trading Days Since the Iran Conflict Began: Top 5 Energy Stocks to Watch

Oil has surged 70% in just 26 trading days since the war in Iran began, marking a faster pace than the 2022 Russia/Ukraine energy shock. WTI crude, the U.S. benchmark, has climbed from $66.96 on Feb. 27 — the day before coordinated attacks by the U.S. and Israel began — to $104.69 on March 30.

The physical market is under severe stress: The net hit to global commercial oil stocks from Strait of Hormuz disruptions is 11.4 million barrels per day, and Saudi Arabia is charging Asian customers approximately $20 per barrel above benchmark prices — a record premium.

Meanwhile, prediction markets now price an 87% probability that crude hits $120 before any ceasefire could occur. Here are the five energy names most directly in the crosshairs.

1. United States Oil Fund (USO)

United States Oil Fund (NYSEARCA:USO) is the most direct crude oil proxy on this list. The fund tracks WTI futures and carries $1.1 billion in net assets with a 0.7% expense ratio. USO is up 105.81% year-to-date, rising from $69.16 to $141.93, with a one-month gain of 36.04%. Because USO holds front-month futures, it captures spot price moves with minimal lag. If WTI reaches $120, the level prediction markets assign an 84% probability — USO would be the clearest beneficiary. The key risk is contango roll costs eroding returns over extended holding periods.

2. Energy Select Sector SPDR Fund (XLE)

Energy Select Sector SPDR Fund (NYSEARCA:XLE) offers diversified energy sector exposure with $37.9 billion in net assets and a lean 8 basis point expense ratio. The fund is 99.7% allocated to energy, with ExxonMobil and Chevron comprising 41.04% of the portfolio. Three stocks from this article — PSX, OXY, and DVN — appear in XLE’s holdings. XLE is up 32.03% year-to-date and 53.99% over the past year. Its underperformance relative to USO reflects equity risk premium drag from broader market volatility, but XLE’s diversification across upstream, midstream, refining, and services limits single-name concentration risk during geopolitical events.

3. Occidental Petroleum (OXY)

Occidental Petroleum (NYSE:OXY) carries the sharpest upstream leverage in this group. The company operates in the Permian Basin, Rockies, and the Middle East and North Africa — direct exposure to the conflict zone. OXY posted Q4 2025 production of 1,481 Mboed, exceeding the high end of guidance, while the OxyChem divestiture to Berkshire Hathaway cut principal debt by $5.8 billion to $15.0 billion. The stock is up 48.99% year-to-date. Reddit sentiment peaked bullish in early April, driven by posts citing “Iran stated that Iran-Oman Hormuz protocol will NOT apply during wartime” with 538 upvotes. OXY trades at a trailing PE of 47x, reflecting the market’s pricing of sustained high crude. Every $10/barrel increase in realized crude translates into materially higher free cash flow given the company’s 1,481 Mboed production base.

4. Phillips 66 (PSX)

Phillips 66 (NYSE:PSX) benefits from crack spread expansion rather than wellhead pricing. Worldwide realized refining margins expanded from $6.08 per barrel in Q4 2024 to $12.48 per barrel in Q4 2025, and crude utilization hit 99%. PSX is up 34.40% year-to-date. Texas and North Dakota oil grades are surging as refiners compete for domestic barrels — a direct tailwind for PSX’s Central Corridor operations. The risk is margin compression if crude rises faster than product prices. A $40 per barrel crude increase historically creates real CPI pressure in the forward 3-month window, which could trigger demand destruction. PSX’s West Coast operations remain a drag, posting a $403 million pre-tax loss in Q4.

5. Devon Energy (DVN)

Devon Energy (NYSE:DVN) is a pure-play domestic shale operator with proved reserves of 2.4 billion Boe and Q4 2025 oil production of 390,000 barrels per day. DVN is up 32.77% year-to-date and trades at a trailing PE of just 12x, the cheapest valuation in this group. The pending all-stock merger with Coterra Energy targets $1 billion in annual pre-tax synergies and would boost the quarterly dividend 31% to 31.5 cents/share. Devon’s variable dividend history shows the policy’s sensitivity to oil prices: payouts reached $1.55 per quarter in Q3 2022 during the last major oil spike. Merger execution risk and federal lands regulatory exposure are the primary overhangs.

Conclusion

Three themes cut across all five names. The supply shock is historically fast: crude is still roughly 10% below its 2022 peak, suggesting further upside if the Hormuz blockade persists. Domestic producers and refiners benefit asymmetrically versus European and Asian peers: the GDP impact on the US is limited, but CPI pressure in the forward 3-month window is real. The diplomatic breakdown on April 7, with Iran rejecting a proposed 45-day truce, narrows the near-term de-escalation path.

The primary uncertainty is whether OPEC+ spare capacity or if Strategic Petroleum Reserve releases can offset the 11.4 million barrel per day net supply deficit before demand destruction sets a price ceiling.