ExxonMobil CEO Darren Woods has issued a stark warning to investors: the ongoing geopolitical conflict in the Middle East is causing significant supply disruptions that the market may not fully appreciate. He cautions that even after the conflict subsides, energy markets could take years to stabilize, suggesting that elevated energy prices might persist until 2027. For those anticipating continued high oil prices, Woods points to Devon Energy and Diamondback Energy as potential investment opportunities.

Both companies are well-positioned to capitalize on rising oil prices due to their upstream focus on oil and natural gas production. Devon Energy has projected a free cash flow yield of 15% at $90 per barrel of West Texas Intermediate (WTI), which could rise significantly with increasing prices. Similarly, Diamondback Energy is expected to benefit from the same price dynamics, making them attractive options for investors bullish on oil.

While the current environment presents a compelling case for investing in these U.S.-based companies, it’s crucial to remain vigilant. Historical trends indicate that energy prices will eventually decline, necessitating close monitoring of these stocks as the market evolves.

Source: fool.com