Energy stocks rally as oil prices spike: time to buy, hold, or cash in?

Since fighting with Iran erupted on Feb. 28, energy stocks have stood out as some of the few consistent winners for bullish investors—until a social media post from President Trump triggered a drop in oil prices, dragging energy shares down with it. The episode underscored how fragile markets are right now, where even a single headline can spark sharp swings.

That’s why recent remarks from Chevron CEO Mike Wirth carry weight. He warned that markets may be underestimating the impact of potential supply disruptions, particularly if Iran closes the Strait of Hormuz—a key route that typically handles about 20% of global oil flows . According to Wirth, pricing is being driven more by perception than solid information, even as investors are flooded with conflicting data.

Still, his view shouldn’t be dismissed as self-serving. With decades of operational experience in volatile regions like Venezuela, Wirth understands how deeply disruptions can affect supply chains—and how long it can take for markets to stabilize again.

As a result, even if oil avoids extreme scenarios—such as the $200-per-barrel projections floated by some analysts—consumers may still face elevated fuel prices for an extended period. For investors who missed the initial rally, opportunities may still exist, particularly across different segments of the energy sector.

Big Oil Momentum: Chevron at the Forefront in a Supply-Constrained Market

Among major oil companies, Chevron stands out as a top pick. Its stock (CVX) has surged nearly 33% in 2026, breaking out of a multi-year range that had held since 2022.

Much of this rally followed U.S. military actions in Venezuela, where Chevron uniquely maintains operations among international oil firms.

That said, investors may question whether the stock is vulnerable to a pullback if tensions in the Strait of Hormuz ease. Currently, CVX trades about 11% above its average analyst price target. Still, those targets are being revised upward, with the most optimistic call from Piper Sandler lifting its target to $242 from $179.

Over the past three years, Chevron has delivered roughly 50% total returns—modest for growth-focused investors, but notable given its reputation as a reliable dividend payer. Even after its recent rally, the stock offers a 3.5% yield, reinforcing its appeal as a blend of income and stability.

Refining Edge: Valero Benefits from Volatility and Expanding Margins

While Chevron represents upstream exposure, Valero Energy provides a different angle—pure refining. This makes it well-positioned even in volatile oil markets.

Unlike producers, refiners profit from the “crack spread,” or the gap between crude input costs and refined product prices. Supply disruptions that hurt producers can actually boost refining margins.

Valero, the world’s largest independent refiner, operates 15 facilities across North America and the U.K., giving it both scale and flexibility—especially valuable if supply routes shift due to geopolitical risks.

Its stock (VLO) has climbed over 45% in 2026, now trading about 20% above consensus targets. While somewhat extended, analysts continue to raise expectations. Meanwhile, investors benefit from a dividend yield near 2%, offering a mix of cyclical upside and income.

Midstream Stability: Enbridge Delivers Income with Volume-Driven Growth

Another way to play the energy rally is through midstream operators like Enbridge, which function more like toll collectors for oil and gas flows.

These companies earn fees based on volume rather than commodity prices—and volumes are currently near record highs in early 2026.

Enbridge is one of the largest pipeline operators in North America, with over 18,000 miles of infrastructure, transporting roughly 30% of the region’s crude oil and about 20% of U.S. natural gas demand.

Over the past three years, ENB has returned around 80%, highlighting the consistency of midstream performance. With a consensus price target implying nearly 20% upside and a dividend yield around 5.1%, Enbridge offers a compelling combination of steady income and moderate growth.

Sources: Chris Markoch