Protect Your Portfolio From Inflation: Buy These 2 Energy Stocks

Geopolitical tensions are rising, and with the Strait of Hormuz still closed to most ships, energy prices have remained elevated. Oil is now above $100 a barrel as of this writing and will likely go up even further if the strait is closed for longer.

If the prices of oil and natural gas remain elevated, it will likely induce inflation in markets such as the U.S. and increase the risk of a recession. And if you are worried about how these developments may affect your portfolio, here are two energy stocks you can load up on as a hedge against inflation.

Occidental Petroleum’s North American assets

Even though 15% of Occidental Petroleum‘s (OXY +4.06%) energy assets are in the Middle East, the oil and gas producer’s stock has soared to start the year, trading up 44.5% year to date as of this writing on March 24.

Investors are betting that the region’s conflict will lead to increased investment in North American oil and gas projects, to which Occidental has significant exposure. And if these remain among the world’s most secure ways to source oil and natural gas, those commodities may command higher selling prices as places like Europe and Asia demand petroleum to sustain their economies.

The last time that oil prices soared, Occidental Petroleum’s free cash flow (FCF) soared to $12 billion. If prices stay above $100 a barrel throughout 2026, the company may generate even more in FCF despite the uncertainties around its Middle East assets.

After the stock’s recent bump, the company now has a market cap of $61 billion, which would only be around five times this level of FCF, making Occidental Petroleum a nice inflation hedge if you are worried about oil prices staying high for the long haul.

Chevron’s masterful pivot

A company that has skillfully transitioned from the Middle East to North and South America is Chevron (CVX +1.33%). It remains one of the largest oil and gas producers in the world and recently secured a strategic win by making large investments in Venezuela and Guyana, including the acquisition of Hess Energy. With the market potentially opening up in Venezuela, this could help the company at the perfect moment to increase production as oil and gas prices rise.

Chevron has only an estimated 5% of its FCF exposed to the Middle East, putting it in a much better position than the competition. Right now, the stock is up 33% in 2026, but it could still offer value to investors worried about oil prices staying higher for longer.

Shares trade at a dividend yield of 3.44%. Last time oil prices soared, Chevron’s FCF zoomed up to $36 billion, which is just over 10 times its current market capitalization. This is a lower multiple than Occidental Petroleum’s peak FCF, but it has now significantly expanded its production capabilities from around 3 million barrels per day in 2022 to over 4 million barrels per day this year. That could help its FCF soar, making Chevron stock still a cheap inflation hedge for any portfolio right now.