Crude oil prices have surged to nearly $120 a barrel, the highest since 2022, following the closure of the Strait of Hormuz. Experts, including JPMorgan and Onyx Capital Group, warn that prices could escalate to $150 or even $200 if the disruption continues, significantly impacting the global oil market. The closure has led to a staggering 57% drop in oil production from the Persian Gulf, forcing economies to draw down record amounts from storage.

The potential for rising prices presents a significant opportunity for low-cost oil producers like Chevron and ConocoPhillips. Chevron, with a breakeven level around $30 per barrel, stands to generate substantial free cash flow, especially if prices exceed $150. Similarly, ConocoPhillips, with a breakeven in the mid-$40s, is poised to increase its capital program and share repurchases as cash flow surges.

For market professionals, the key takeaway is to consider investing in low-cost oil producers, which are well-positioned to thrive amid escalating crude prices and supply constraints.

Source: fool.com