Oil Stocks Could Reap a $60 Billion Windfall if Crude Prices Remain Elevated This Year

Oil prices have been scorching hot this year, fueled by escalating tensions with Iran. WTI, the primary U.S. oil benchmark, has risen from around $57 a barrel at the start of the year to about $95, a nearly 65% surge. Meanwhile, Brent oil, the global benchmark, has experienced a similar trajectory. It's currently above $100 a barrel, up more than 65% this year.

Surging crude oil prices are a boon for oil stocks. According to a Financial Times report, U.S. oil companies could book more than $60 billion in additional revenue this year if crude prices remain elevated.

Here's a look at some of the oil stocks poised to cash in on the surge in crude prices.

Image source: Getty Images.

The situation in the oil market

Oil prices have spiked this year due to supply issues stemming from the war with Iran. The country has attacked oil tankers and oil infrastructure in the Persian Gulf. As a result, oil isn't flowing freely out of the region. That's a major issue since about 20% of global supplies flow out of the Persian Gulf through the Strait of Hormuz. The longer the Strait remains effectively closed to oil tankers, the higher crude prices could go.

While crude prices could continue surging, the oil futures market expects the supply disruptions to be temporary. For example, while it costs over $100 a barrel for an oil futures contract with delivery in May, crude contracts that expire this fall are in the mid-to-low $80s. However, if oil flows out of the Gulf remain constrained, or Iran inflicts major damage to oil infrastructure in the region, crude prices could surge well over $100 a barrel and remain there for the rest of the year.

Cashing in on higher crude prices

The surge in oil prices was completely unexpected. Many U.S. energy companies anticipated that oil prices would remain low this year due to abundant supply and slowing demand. Instead, the world is experiencing the biggest supply shock in decades.

Given their anticipation of lower prices, most producers set conservative capital spending plans. That would allow them to generate strong cash flows at lower oil prices. For example, Diamondback Energy (NASDAQ: FANG), a leading oil producer in the Permian Basin, planned to maintain a disciplined capital spending program this year. It aimed to invest between $3.6 billion and $3.9 billion, enabling it to maintain its production rate from the end of last year. That would allow Diamondback to generate $4.3 billion of free cash flow if oil averaged $60 a barrel. It also positions the company to produce significantly more surplus cash at higher crude prices. It can generate over $6.7 billion in free cash if crude averages $80 a barrel this year, with that figure rising even more if crude averages $100 a barrel.

Meanwhile, oil giant Chevron (NYSE: CVX) had expected to produce a gusher of additional free cash flow this year, even with no improvement in oil prices. A combination of cost-saving initiatives, the closing of its Hess merger, and recently completed growth capital projects positions it to generate $12.5 billion of additional free cash flow this year if oil averages $70 a barrel. However, every $1-per-barrel change in oil prices can impact Chevron's full-year earnings and cash flow by $600 million. With crude prices up significantly, Chevron is on track to generate an even bigger gusher of excess cash flow this year.

Occidental Petroleum (NYSE: OXY) also had a conservative view on oil prices entering this year. The oil giant planned to cut its capital spending by around $550 million, to a range of $5.5 billion to $5.9 billion. That spending reduction, along with interest expense savings from debt repayments, positioned Occidental to generate more than $1.2 billion in additional free cash flow this year, even with no change in oil prices. However, every $1-per-barrel change in crude prices will affect its annualized cash flow by $265 million. With crude surging, Occidental can also produce substantially more free cash flow this year if prices remain elevated.

An unexpected windfall

Heading into 2026, most oil companies anticipated crude oil would be in the $60- $70 per barrel range. That led them to set conservative capital spending plans to generate more free cash flow at lower oil prices. However, with crude prices soaring, they're on track to produce a much bigger gusher of cash. That would give them more money to return to shareholders via dividends and buybacks.

Matt DiLallo has positions in Chevron. The Motley Fool has positions in and recommends Chevron. The Motley Fool recommends Occidental Petroleum. The Motley Fool has a disclosure policy.