Geopolitical experts have been warning for months that the intersecting conflicts in the Middle East threaten to throw the region into a potentially more devastating war. Oil prices have climbed in the face of these rising tensions. As always, the risk of war brings with it the potential for curbed global supply. However, a surprise build-up in inventories have continued to weight on prices.
The price of WTI Crude was trading at $73 per barrel. Top US oil stocks have started slowly in 2024. Exxon Mobil (NYSE:XOM) is a Texas-based company that is engaged in the exploration and production of crude oil and natural gas in the US and around the world. Its shares have plunged 12% year-over-year as of close on Wednesday, January 17. Chevron Corporation (NYSE:CVX) is a California-based company engaged in the integrated energy and chemicals operations in the US and internationally. This energy stock has dropped 19% compared to the prior year.
Two incidents in the Middle East contributed to a positive swing in oil prices this week. In Yemen, US forces struck more than a dozen Houthi missile launchers in response to the group’s repeated attacks on shipping in the Red Sea. Meanwhile, Pakistan also carried out retaliatory strikes in Iran. The crisis in Yemen has cut shipping transits in the Red Sea and Suez Canal.
Investors in oil stocks should watch the ongoing crisis in the Middle East closely. The conflict in the Red Sea threatens to bring Iran into direct conflict with the US as Tehran’s proxies have grown more aggressive in the face of the Israeli-Hamas war.