The Best Oil Stock to Buy as Iran Tensions Rewrite the Global Energy Map

As tensions in Iran continue to escalate, the world is entering what could be the most serious energy crisis in decades. The Strait of Hormuz is mostly closed right now, and that's a serious problem because roughly 20% of the world's oil and natural gas (as well as all sorts of other goods) passes through this narrow waterway.

If the situation continues on its current course, it could rewrite the global energy map.

ExxonMobil (NYSE: XOM) is already an industry behemoth, but the brewing energy crisis makes it arguably the best oil stock to buy amid the war. Here's why.

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War in Iran is causing a price shock and a windfall

If you've followed the news, you'll already know that commodity prices have surged since the war broke out. Crude oil prices have shot up over the past month, now hovering around $100 per barrel. A Forbes report estimated that West Texas intermediate (WTI) crude oil could soar to $140 per barrel in a severely disruptive scenario, such as the prolonged bombing of energy infrastructure in the Middle East.

Oil companies can't turn a knob and produce more oil overnight, but the price surge does fatten profit margins on what they already produce. As war disrupts oil output in the Middle East, it benefits ExxonMobil and other companies that produce oil in the U.S. and other unaffected regions.

ExxonMobil produced an average of 4.7 million barrels of oil equivalent (BOE)/day in 2025, its best production year in over four decades. That was due to rising production from the Permian Basin and Guyana, two strategic assets that together accounted for 2.3 million BOE/day last year.

Why that makes ExxonMobil a top oil buy

ExxonMobil is still repurchasing shares to offset the stock issued for its $59.5 billion acquisition of Pioneer Natural Resources in 2024. If this windfall continues, the company will have even more financial firepower to shrink its share count back down, leaving ExxonMobil with the acquired assets for the future with none of the share dilution.

That future could involve another blockbuster acquisition sooner than investors might have originally guessed. Mergers and acquisitions happen frequently in the oil and gas industry. Depending on how much cash flow ExxonMobil generates, it could reload the balance sheet for another acquisition.

Lastly, ExxonMobil will be able to continue raising its dividend. Management has increased the dividend for 43 consecutive years, a rarity in this industry, which speaks to the company's ability to navigate oil and gas price cycles.

The stock is up 36% over the past three months and could come back down a bit if the war in Iran ends sooner rather than later. But even after its surge, ExxonMobil still yields 2.5% today, and investors could enjoy more aggressive dividend hikes if oil prices remain elevated.

Justin Pope 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.