ConocoPhillips (COP) shares surged 16.3% in March, sharply outperforming the S&P 500’s 5% decline, driven by a dramatic rise in crude oil prices. Brent crude skyrocketed 43% to nearly $104 per barrel, while WTI soared 51%, marking their largest monthly gains since 2020. The catalyst behind this surge is the escalating conflict with Iran, which has targeted energy shipping routes and infrastructure in the Persian Gulf, effectively closing the Strait of Hormuz to significant traffic.

The implications for ConocoPhillips are substantial, as higher oil prices directly enhance its profitability. The company generated $7.3 billion in free cash flow last year with Brent averaging $69, and every $1 increase in Brent boosts annual cash flow by approximately $65 million. However, ongoing disruptions from the conflict may impact its LNG projects in Qatar, potentially delaying future cash flows.

Despite the recent surge, ConocoPhillips remains an attractive buy. With oil prices currently above $110 per barrel and the potential for further increases, coupled with long-term growth prospects, the stock is poised for continued upside.

Source: fool.com