OIL
The price of oil hit $77.58/barrel, marking one of the sharpest increases in recent years.
But why did we see this increase There are two main reasons:
(a) reduced supply.
(b) the Strait of Hormuz.
Iran is the 7th largest producer globally and a founding member of OPEC. With 3.3 million barrels produced daily and reserves of 157 billion, when its production is “paralyzed,” supply contracts. Markets react by pricing in the consequences in advance.
As for the Strait, Iran has threatened to shut it down. Around 20–30% of the world’s oil passes through it. If it’s closed, a $100 price tag per barrel is far from unlikely. Such a move would cause a massive shock to the global economy and push inflation higher.
Although it's difficult for Iran to go through with it (it would hurt its own economy), the fear alone is enough to cause market turmoil.
EXXON MOBIL
Now, let’s move on to my favorite part. When we talk about oil, we can't leave Exxon Mobil out of the conversation—it’s arguably the most INTERESTING LONG-TERM investment right now.
It’s the largest and most solid oil company in the world. I’ve invested a lot, and the investment is in the green. I believe it will perform even better in the future, especially in the current environment of energy instability.
Of course, Exxon Mobil directly benefits from higher oil prices. But that’s not the only reason I say this.
Here’s why:
Acquisition of Pioneer Natural Resources: +$3 billion in annual revenue, ROI over 30%. This is a highly efficient strategic expansion.
Guyana: 1.3 million new barrels per day from a new drilling operation. It’s one of the most productive oil fields in the world.
Natural Gas: Plans to double production to meet the rising demand from data centers. AI is driving energy demand through the roof.
Hydrogen: New facilities expected to generate $4 billion in profits by 2030. It’s also partnering with Abu Dhabi. Hydrogen is the alternative for a greener transition.
Dividends & Buybacks: In 12 months, it returned $48 billion to shareholders.
Shareholder Yield is close to 10%! This shows the company consistently rewards its shareholders.
All in all, these factors make Exxon Mobil ($XOM) one of the most well-structured companies in the energy sector.