The U.S. Strategic Petroleum Reserve (SPR) was created in 1975 by the Energy Policy and Conservation Act, signed into law by President Gerald Ford. It was established in response to the 1973-1974 oil embargo, which highlighted the U.S. economy’s vulnerability to oil supply disruptions. Those who were around at the time, like your author, witnessed long lines at the gas stations as the price of a gallon of gas jumped as much as 43%. In fact, the national average cost of gas rose from about $0.385 per gallon in October 1973 to $0.551 per gallon in June 1974. Under President Biden’s administration, the Strategic Petroleum Reserve released more than 200 million barrels of oil, primarily through emergency sales in 2022. The most significant release was 180 million barrels in response to supply disruptions caused by Russia’s invasion of Ukraine. While a difficult situation, most feel that this was not what the SPR was created for.
Oil prices fell below $60 per barrel recently due to a combination of oversupply and weak demand. Global oil inventories are rising, putting downward pressure on prices. At the same time, both OPEC+ and U.S. production are increasing amid relatively stable global oil demand. Some banks expect West Texas Intermediate (WTI) Oil Prices to Be Below $60 for the remainder of 2025. OPEC+ recently announced plans to unwind its production cuts; the increases are lower than those initially proposed. The U.S. Energy Information Administration expects the price of crude oil to fall below the current $60 per barrel by the end of the year and average near $50 per barrel through 2026, as more supply is added to an already well-supplied market.
With benchmarks hitting 2025 lows and reaching levels not seen since 2021, it makes sense for investors to consider buying some of the biggest and best mega-cap integrated leaders. Five stocks make sense now; all pay dependable dividends, and all are rated Buy at major Wall Street firms.
This company is one of the premier European integrated oil giants, paying shareholders a substantial 5.71% dividend. BP p.l.c. (NYSE: BP) engages in the energy business worldwide.
It operates through:
BP produces and trades natural gas, offers biofuels, operates onshore and offshore wind and solar power generating facilities, and provides decarbonization solutions and services, such as hydrogen and carbon capture, usage, and storage.
The company is also involved in the convenience and mobility business, which includes managing the sale of fuels to wholesale and retail customers, convenience products, aviation fuels, and Castrol lubricants; refining, supplying, and trading of oil products; and operating electric vehicle charging facilities.
In addition, it produces and refines oil and gas and invests in upstream, downstream, and alternative energy companies. It also invests in advanced mobility, bio and low-carbon products, carbon management, digital transformation, and power and storage areas.
Berenberg Bank has a Buy rating, but we could not find a target price in U.S. dollars.
Chevron Corporation is an American multinational energy company primarily focused on oil and gas. This integrated giant is a safer option for investors looking to position themselves in the energy sector, paying a substantial 4.40% dividend, which was raised by 5% earlier this year. Chevron Corporation (NYSE: CVX) operates integrated energy and chemicals businesses worldwide through its subsidiaries and offers investors very strong credit ratings (AA), diversified operations, strong margins, and a long history of paying dividends and raising them annually.
The company operates in two segments:
The Upstream segment is involved in the following:
Exploration, development, production, and transportation of crude oil and natural gas
Processing, liquefaction, transportation, and regasification associated with liquefied natural gas
Transportation of crude oil through pipelines, and transportation, storage
Marketing of natural gas, as well as operating a gas-to-liquids plant
The Downstream segment engages in:
Refining crude oil into petroleum products
Marketing crude oil, refined products, and lubricants
Manufacturing and marketing renewable fuels
Transporting crude oil and refined products by pipeline, marine vessel, motor equipment, and rail car
Manufacturing and marketing of commodity petrochemicals, plastics for industrial uses, and fuel and lubricant additives
It also involves cash management, debt financing, insurance operations, real estate, and technology businesses.
Chevron Corporation announced in late 2023 that it had entered into a definitive agreement with Hess Corporation (NYSE: HES) to acquire all of the outstanding shares of Hess in an all-stock transaction valued at $53 billion, or $171 per share based on Chevron’s closing price on October 20, 2023. Under the terms of the agreement, Hess shareholders will receive 1.0250 shares of Chevron for each Hess share. The transaction’s total enterprise value, including debt, is $60 billion. The Federal Trade Commission approved the deal last October, and it is expected to close this fall.
UBS has a Buy rating with a huge $197 target price.
The big always gets bigger, and this company completed a $22.5 billion purchase of Marathon Oil this time last year. This deal added high-quality assets, particularly in the Eagle Ford and Bakken shales, to the company’s portfolio. ConocoPhillips (NYSE: COP) is an exploration and production company with a rich 3.57% dividend.
Its Alaska segment primarily explores for, produces, transports, and markets crude oil, natural gas, and NGLs.
The Lower 48 segment consists of operations located in the 48 contiguous states in the United States and the Gulf of Mexico.
Canadian operations consist of the Surmont oil sands development in Alberta, the liquids-rich Montney unconventional play in British Columbia, and commercial operations.
The Europe, Middle East, and North Africa segment consists of operations principally located in:
The Asia Pacific segment has exploration and production operations in China, Malaysia, and Australia, and commercial operations in China, Singapore, and Japan. The Other International segment includes interests in Colombia as well as contingencies associated with prior operations in other countries.
Jefferies has a Buy rating with a $120 target price.
ExxonMobil manages an industry-leading portfolio of resources and is one of the world’s largest integrated fuels, lubricants, and chemical companies. It trades at 18% below fair value, yielding 3.48%. The decline in oil prices presents investors with an excellent entry point, and they will likely seize the opportunity to secure a strong dividend yield. Exxon Mobil Corporation (NYSE: XOM) is the world’s largest international integrated oil and gas company, exploring for and producing crude oil and natural gas in the United States, Canada/South America, Europe, Africa, Asia, and Australia/Oceania.
ExxonMobil also manufactures and markets commodity petrochemicals, including olefins, aromatics, polyethylene, and polypropylene plastics, as well as specialty products. Additionally, the company transports and sells crude oil, natural gas, and petroleum products.
Top Wall Street analysts expect the company to remain a key beneficiary in a higher oil price environment, and most remain very optimistic about the company’s sharp positive inflection in capital allocation strategy.
Upstream portfolio and leverage to a further demand recovery. ExxonMobil offers greater Downstream/Chemicals exposure than its peers.
ExxonMobil completed its purchase of oil shale giant Pioneer Natural Resources Company in 2024 in an all-stock transaction valued at $59.5 billion. The deal created the largest U.S. oil field producer and guarantees a decade of low-cost production.
UBS has a Buy rating on the shares with a $143 target price objective.
TotalEnergies SE is an integrated energy and petroleum company founded in 1924 and is one of the seven supermajor oil companies. This French-integrated giant is another excellent way to play the energy sector from the European side. It sports a massive 6.35% dividend. TotalEnergies SE (NYSE: TTE) is an integrated oil and gas company with a global presence.
The company operates through four segments:
Exploration and production
Integrated Gas
Renewables and power
Refining, chemicals, marketing, and services
The company’s Exploration & Production segment involves oil and natural gas exploration and production activities in approximately 50 countries.
The Integrated Gas, Renewables & Power segment engages in:
Liquefied natural gas (LNG) production
Shipping, trading, and regasification activities
Trading of liquefied petroleum gas (LPG), petcoke and sulfur, natural gas, and electricity
Transportation of natural gas
Electricity production from natural gas, wind, solar, hydroelectric, and biogas sources
Energy storage activities; and development and operation of biomethane production units, as well as providing energy efficiency services
The TotalEnergies Refining & Chemicals segment refines petrochemicals, including olefins and aromatics, as well as polymer derivatives, such as polyethylene, polypropylene, polystyrene, and hydrocarbon resins. It also converts biomass and processes elastomers. This segment also trades and ships crude oil and petroleum products.
Its Marketing & Services segment produces and sells:
Lubricants
Supplies and markets petroleum products, including bulk fuel, aviation and marine fuel, special fluids, compressed natural gas, LPG, and bitumen; and fuel payment solutions
The company also operates approximately 15,500 service stations.
Royal Bank of Canada has a target of 80.95 in U.S. dollars.
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