Why ExxonMobil Stock Rocketed 17.5% in January

Shares of ExxonMobil (NYSE: XOM) soared to start 2026, rallying 17.5% January. That was a big move for the leading oil stock. It significantly outperformed the S&P 500, which rose 1.4% in January.

Crude oil prices helped give ExxonMobil stock a jolt last month as they rallied for the first time in six months. However, that wasn't the only catalyst fueling the oil stock's rise in January.

Image source: Getty Images.

Oil's early surge

Oil prices rallied sharply in January. Brent oil, the global benchmark, rocketed 16%, while WTI, the U.S. benchmark, surged 14%. That was the first monthly gain in crude prices in six months. Higher oil prices tend to drive up oil stock prices because their profitability increases as prices rise.

Two factors fueled the rise in crude prices last month. The U.S. captured former Venezuelan President Nicolás Maduro, whom it later charged with narcoterrorism. This intervention sparked fears of potential supply disruptions as Venezuela is a major oil producer. Additionally, tensions between the U.S. and Iran grew last month, which could also impact oil supplies if they boil over into a military conflict.

Industry-leading financial results

While higher oil prices were a major catalyst for Exxon's stock last month, they weren't the only fuel source. The oil giant reported strong fourth-quarter and full-year results in late January. The company posted industry-leading earnings of $28.8 billion and cash flow from operations of $52 billion last year. Exxon delivered its highest annual oil and gas production in over 40 years and record refinery volumes. These strong results helped support its industry-leading shareholder cash distributions of $37.2 billion. That included $17.2 billion in dividends, the second-highest among S&P 500 companies. Those numbers proved that Exxon is in a class of its own.

Exxon continues to benefit from its transformational strategy of investing in advantaged assets (the lowest-cost and highest-margin assets) and delivering structural cost savings. The company delivered 10 key projects last year, adding $3 billion to its annual earnings potential. Additionally, Exxon increased its cumulative cost savings to $15.1 billion since 2019, more than all of its large peers combined.

The oil giant expects to continue delivering improved profitability and cash flow. It raised its 2030 plan in December to $25 billion in earnings growth and $35 billion in cash flow growth, compared to 2024's levels on a constant-price, constant-margin basis.

A well-oiled, value-creating machine

Exxon has delivered peer-leading earnings per share growth and total returns over the past five years, which is impressive given its massive size. The oil giant expects to deliver robust earnings and cash flow growth over the next five years, which should give it the fuel to continue producing high-octane total returns. That upside potential makes Exxon stock still look like a compelling investment opportunity even after last month's rally.

Matt DiLallo has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.