Top 3 Energy Stocks to Watch in 2025 Amid Saudi Oil Field Drone Strikes – Prices Surge
Explore three promising energy stocks set to benefit from the recent drone attacks on Saudi oil facilities, driving oil prices to new highs in 2025.
The recent drone strikes on Saudi Arabia's vital oil infrastructure have triggered a significant disruption, potentially halving the kingdom's oil output and shaking global energy markets.
Despite energy stocks lagging behind the S&P 500 by approximately 14% this year due to global economic concerns and US-China trade tensions, this sector is poised for a rebound following the dramatic attacks on Saudi oil plants. The United States has attributed these aggressive drone strikes to Iran, which jeopardizes nearly 5 million barrels per day of crude production—accounting for half of Saudi Arabia’s output and about 5% of worldwide oil supply.
Credit Suisse energy analyst Saul Kavonic remarked to Bloomberg, "The oil market is witnessing an unprecedented supply disruption and price reaction. Political risk premiums have reemerged as a critical factor influencing oil prices." The heightened geopolitical tensions, including earlier incidents involving Iran and US assets, are propelling crude oil futures to surge, with October contracts spiking over 15% before a slight pullback after US President Donald Trump announced releasing oil reserves to stabilize supply. This marks the largest single-day price increase in over three years.
Investors anticipating sustained higher oil prices should consider monitoring these three independent oil and gas companies, which demonstrate strong fundamentals and potential for growth amid current market volatility.
Pioneer Natural Resources Company (PXD) – Market Cap $22.64B
Based in Irving, Texas, Pioneer Natural Resources specializes in oil and gas exploration and production within the United States. The company reported reserves of 977 million barrels of oil equivalent and a net production of 320 mboe by the end of 2018. Pioneer exceeded earnings expectations in Q2 2024 with adjusted EPS of $2.01, driven by increased output in the Permian Basin. While the stock has yielded a modest 3.22% year-to-date, it gained 5.51% in the past month, offering a dividend yield of 1.35%.
After hitting a peak in April, PXD shares experienced a decline amid trade war concerns but have recently shown bullish momentum, trading above key moving averages. Investors should consider taking profits near $162, where resistance is anticipated, and manage risk with stop-loss orders below $129.35, adjusting stops upward if the stock surpasses the 200-day moving average.
Apache Corporation (APA) – Market Cap $9.15B
Houston-based Apache Corporation operates across North America, Egypt, and the North Sea, holding reserves of 1.2 billion barrels of oil equivalent and producing 466 mboe as of late 2018. Despite a year-over-year decline due to lower commodity prices, Apache beat Wall Street’s Q2 expectations, driven by strong international production. The stock offers an attractive 4.17% dividend yield and has outperformed the sector with an 11% gain in the last month.
APA shares faced resistance earlier in the year but have recently broken above a downtrend and the 50-day moving average, signaling potential for further gains. Traders should aim for a take-profit level near $29, where multiple resistance points converge, and place stop-loss orders below $23 to safeguard investments.
Cimarex Energy Co. (XEC) – Market Cap $4.87B
Cimarex Energy, operating primarily in Oklahoma, Texas, and New Mexico, reported reserves of 591 million barrels of oil equivalent and daily production of 221 mboe at the end of 2018. Although its recent earnings missed expectations, analysts project a 46% upside with a 12-month price target of $70.24. The stock trades at a favorable valuation of approximately seven times forward earnings, compared to the industry average of 13 times, and provides a 1.81% dividend yield. Despite a 21.28% decline year-to-date, XEC has rebounded 13.59% over the past month.
After a prolonged downtrend, Cimarex shows signs of recovery with bullish divergences and a breakout above key technical levels. Investors should consider scaling out profits at $55 and $65 resistance points while placing stop-loss orders below the recent low of $44.95 to protect capital.
These energy stocks present compelling opportunities for investors looking to capitalize on the evolving geopolitical landscape and energy market dynamics in 2024.
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