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Oil Stocks to Buy: Chevron or Exxon Mobil?
Posted On Nov 03, 2025 by Chris Markoch
Much to the chagrin of investors, oilstocks have been laggards in2025. While the S&P 500 keeps grinding to new highs on the back of technology stocks, particularlythose related to artificial intelligence (AI), the energy sectorhas quietly fallen out of favor.
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This isn'ta supply issue; it's one of demand.Crude oil prices have been drifting below $60 per barrel, even though oil companies are pumping at record levels.That's not necessarily at the break-even point for oil drillers, but it's getting close.
However, oil is a cyclical industry. And that cycle is ready to turn in favor of oil companies. For investors with a long-term perspective, this could be one of the better times in years to build or add to positions in oil stocks. Thatmeans looking at two blue-chip, best-in-class oil giants:Chevron Corp. (NYSE: CVX) andExxon Mobil Corp. (NYSE: XOM).
Both companies are profitable through the cycle, generate consistent free cash flow, and return capital to shareholders through dividends and buybacks. More importantly, both are poised to benefit from a coming resurgence in global energy demand.
Both companies are profitable through the cycle, generate consistent free cash flow, and return capital to shareholders through dividends and buybacks. More importantly, both are poised to benefit from a coming resurgence in global energy demand.
Crude Oil Is at an Inflection Point
In 2025, the AI revolution has been focused on many large-cap technology stocks that have been creating something being called a circular trade. Hyperscalers, like Microsoft and Meta Platforms, are buying GPU chips from companies like NVIDIA, which is in turn investing in other companies.
However, many analysts have been advising investors to look beyond the brick-and-mortar aspects of the data center buildout and focus on the unprecedented amount of power it will take to keep them up and running. The U.S. Energy Information Administration projects electricity demand will rise more than 13% by 2030, driven in large part by AI-related computing.
Much of that energy still comes from fossil fuels, particularly natural gas and oil derivatives. Even as renewables expand, they cannot meet the total base load required by the data-driven economy of the future. Every data center, manufacturing facility, and infrastructure project still relies on hydrocarbons somewhere along the chain — in logistics, materials, or backup power.
Beyond AI, the broader infrastructure build-out in the U.S., including grid modernization and onshoring manufacturing, is oil-intensive. Steel, cement, and heavy machinery all depend on hydrocarbons. Meanwhile, OPEC+ production discipline and slowing shale growth are keeping supply tight. The combination of rising demand and constrained supply sets up a favorable multi-year backdrop for higher oil prices.
Blue-Chip Oil Stocks to Buy: The Case for Chevron
Chevron has spent the last several years positioning itself for stability and growth. Its recently finalized $53 billion acquisition of Hess Corporation, expands the company's access to world-class assets in Guyana, one of the most promising oil basins in decades. And its 2023 acquisition of PDC Energy deepened its exposure to U.S. shale, particularly in the Denver-Julesburg Basin.
But Chevron's secret weapon may be its leadership in liquefied natural gas (LNG). The company has significant LNG projects across Australia and the U.S. Gulf Coast, giving it an advantage as the world increasingly turns to cleaner-burning natural gas as a transition fuel. As Europe and Asia seek reliable alternatives to coal and Russian pipeline gas, Chevron's LNG capacity could become a profit center for decades.
Financially, Chevron maintains one of the strongest balance sheets in the energy sector. It's also a dividend aristocrat, having increased its dividend payout for 38 consecutive years. The current dividend yield near 4.5% is supported by disciplined capital spending and steady cash generation. Management continues to prioritize shareholder returns, with a long history of buybacks and annual dividend increases.
Blue-Chip Oil Stocks to Buy: The Case for Exxon Mobil
The bull case for Exxon Mobil is built on its model of scale and diversification. The company's integrated operations — spanning upstream, downstream, and chemicals — allow it to capture value across every stage of the energy supply chain. When refining margins are weak, upstream profits help cushion results, and vice versa.
Exxon's growth story starts with Guyana, where it holds a dominant position in one of the world's most productive and low-cost oil fields. In fact, it was the company's assets in Guyana that held up the Chevron-Hess merger.
Production there continues to ramp up rapidly, with multiple projects already sanctioned and more discoveries likely. The region could contribute more than one million barrels per day of production by the end of the decade, at some of the lowest breakeven costs in the industry.
At the same time, Exxon is preparing for the energy transition through large-scale investments in carbon capture, hydrogen, and lithium. Its low-carbon division could one day become a significant profit driver, particularly as global policy shifts toward carbon pricing and sequestration credits.
Like Chevron, Exxon Mobil is a dividend aristocrat with one of the longest and most reliable dividend track records on Wall Street at 42 years. The yield, just under 4%, is backed by consistent free cash flow and a commitment to shareholder returns.
Risks to Oil Stocks
While the setup for oil prices looks constructive, investors should be aware of several risks that could disrupt the bullish narrative.
First, global demand growth could underwhelm if economic conditions soften. A slowdown in China's industrial recovery or a broader U.S. economic deceleration would dampen consumption just as supply remains steady. Even modest demand weakness can pressure crude prices, given the sensitivity of short-term markets.
Second, OPEC+ could change course. The cartel's current production discipline has helped stabilize prices, but internal politics and market share considerations often cause abrupt shifts in strategy. An unexpected increase in production from Saudi Arabia or Russia could quickly alter supply dynamics.
Finally, technological progress in renewables and energy storage could reduce fossil fuel demand faster than expected. While unlikely in the near term, rapid breakthroughs in grid-scale batteries or nuclear small modular reactors could alter the long-run energy mix.
These risks are not reasons to avoid oil stocks but reminders that energy markets move in cycles. Chevron and Exxon have weathered them before, and both have the balance sheets and flexibility to do so again.
Conclusion: Own Either or Both
Oil isn't going away. Hydrocarbons will account for a majority of global energy consumption through at least 2040. Both Chevron and Exxon are positioned not just to survive this transition — but to lead it.
Chevron offers more direct leverage to LNG and natural gas, making it a compelling choice for investors who believe in a gradual decarbonization path. Exxon offers unmatched scale, diversification, and exposure to emerging technologies like carbon capture.
Investors don't have to choose. Owning both stocks provides balance across oil and gas, geographic regions, and time horizons — with reliable income along the way. In a market chasing tech momentum, owning one or both of the world's most profitable oil companies might just be the contrarian bet that pays off.
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