2 Energy Stocks To Buy Before Oil Hits $150 A Barrel
By Brett Schafer – Mar 28, 2026 at 8:47AM EST
Key Points
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Upstream oil producers will undoubtedly benefit if oil prices reach $150.
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ConocoPhillips and Diamondback Energy are two such beneficiaries.
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Both return a lot of cash to holders and can be a hedge for your portfolio.
NASDAQ: FANG
Diamondback Energy
Today’s Change
(-0.17%) $-0.35
Current Price
$201.84
Key Data Points
Market Cap
$57B
Day’s Range
$201.45 – $204.91
52wk Range
$114.00 – $204.91
Volume
5.3M
Avg Vol
2.8M
Gross Margin
35.16%
Dividend Yield
2.01%
ConocoPhillips and its upstream focus
When evaluating energy stocks poised to benefit from rising oil and natural gas prices, it is important to distinguish upstream from downstream players in the petroleum industry. Upstream players are those who explore for and extract oil and gas from the ground, while downstream players refine products. If the price of oil or natural gas rises, upstream producers can earn fat margins as they sell their product down the supply chain.
ConocoPhillips (COP +0.53%) is one of the largest upstream energy players in the world, and even though it has some exposure to natural gas in Qatar, the company should benefit tremendously if oil prices reach $150. Last year, it generated 2.375 million barrels of oil (or natural gas equivalents), with around 1.5 million barrels from the lower 48 states.
The last time oil prices spiked, so did ConocoPhillips’ cash flow. Free cash flow peaked at over $16 billion in 2022. If oil prices reach $150, we could see free cash flow of over $20 billion. Management is guiding to return 45% of excess cash flow to holders in 2026, which would ly result in significant dividends and buybacks. ConocoPhillips stock is ly to do well if oil prices zoom to $150 at some point this year.
Image source: Getty Images.
A company centered on North America
Another factor creating uncertainty is the closure of the Strait of Hormuz. If conflicts continue in the Middle East, companies with assets in North America will do much better, as they have a much safer, more reliable supply to bring to market.
One pure play on North American oil and gas is Diamondback Energy (FANG 0.17%). It is a smaller player that focuses on Texas and should benefit tremendously if the price of oil goes to $150 (along with natural gas).
The stock is up 30% year to date, but I still think it has plenty of upside for holders if the Middle East remains under fire and the Strait of Hormuz remains closed. The company generated $5.5 billion in free cash flow last year, even with oil prices in the gutter. Oil prices around $150 a barrel would ly lead to much higher levels of cash flow. ConocoPhillips, Diamondback Energy is aggressively returning cash to holders through buybacks, and it will be able to do so even more this year.
With a market capitalization of $55 billion right now, Diamondback Energy looks a great stock to buy if you are worried about oil hitting $150 a barrel.
COP Free Cash Flow data by YCharts
Is oil going to $150 a barrel?
Oil has never gone to $150 a barrel. The record is slightly below this, at $147 in 2008 when the U.S. economy was in a recession. Some economists argue that the high price of oil was one of the key factors that made the economic downturn almost two decades ago even worse.
Breaking this previous record would not be out of the question if the Strait of Hormuz closes or if many of the current Middle Eastern supply sources go offline for an extended period. This is especially true given all the inflation over the past two decades.
Don’t assume it is 100% certain that oil prices will reach $150 in 2026. Anything can happen in geopolitics. But if you are truly worried about a supply shock, adding both ConocoPhillips and Diamondback Energy could be a great way to hedge your portfolio.
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About the Author
Brett Schafer is a contributing Motley Fool stock market analyst covering consumer goods, financials, technology, and industrials. Brett is a self-taught investor and has hosted the Chit Chat Stocks podcast since 2018. He previously worked as a lab engineer for science laboratories. He holds a bachelor’s degree in mechanical engineering with minors in finance and mathematics from Washington State University. His lab work on Major League Baseball’s juiced ball problem was featured in The Wall Street Journal and other national outlets.
Stocks Mentioned
ConocoPhillips
NYSE: COP
$133.95
(+0.53%)+$0.70
Diamondback Energy
NASDAQ: FANG
$201.84
(-0.17%)-$0.35
*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.
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