Brent Oil Just Fell Below $90 a Barrel. 3 Top Oil Stocks to Buy Now.

Brent crude oil hit a multi-year high of $119.50 per barrel in March, following the initial outbreak of the Iran war. The conflict disrupted shipments through the Strait of Hormuz, which accounts for roughly a quarter of the world's maritime oil trade, and boosted many oil stocks.

But as of this writing, Brent crude trades at about $87 per barrel. The situation in the Middle East remains volatile, but intermittent peace talks, ceasefires, and discussions to fully reopen the Strait of Hormuz have all brought oil back down from its recent peak.

Image source: Getty Images.

That pullback hurt upstream companies like Occidental Petroleum (NYSE: OXY), which benefit the most from soaring oil prices. However, it's still a great time to invest in midstream companies, which operate pipelines and other infrastructure to transport oil, as well as in the world's largest integrated energy giants. These three oil stocks fit that description: Energy Transfer (NYSE: ET), Enbridge (NYSE: ENB), and Chevron (NYSE: CVX).

Why are Energy Transfer and Enbridge still good investments?

Energy Transfer operates more than 140,000 miles of pipeline across 44 states. Enbridge operates 70,000 miles of pipelines and smaller feeder lines across North America.

Energy Transfer, based in Texas, transports more natural gas than crude oil through its pipes. Enbridge, based in Canada, transports more crude oil than natural gas. Energy Transfer's infrastructure is concentrated in the southern U.S., while Enbridge's pipelines connect Canada to the eastern seaboard, the Midwest, and the Gulf Coast regions in the U.S.

Both of these companies are well insulated from volatile prices because they charge upstream and downstream companies "tolls" to use their infrastructure. As long as those resources flow through their pipes, they can generate plenty of cash to fund their distributions and dividends.

Energy Transfer, which operates as a master limited partnership (MLP), blends its income with a return of capital to pay a high forward distribution yield of 7%. Enbridge, which operates as a standard Canadian corporation, pays a forward dividend yield of 5.1%.

Both stocks are also still reasonably valued because they didn't rally as much as other oil stocks in response to the Iran war. Energy Transfer trades at just 11 times its forward earnings per unit (EPU), while Enbridge trades at 26 times forward earnings. Therefore, these two pipeline stocks are great ways to profit from the oil market without too much exposure to choppy oil prices.

Why is Chevron worth buying?

Chevron, one of the world's largest integrated energy companies, operates upstream, midstream, and downstream businesses. It has a presence in 180 countries, but it gets most of its oil from the U.S., Kazakhstan, and Australia rather than from the Middle East.

Chevron's scale and diversification make it an evergreen stock to hold even if oil prices collapse. While declining crude oil prices will hurt its upstream business, they could help its downstream business by reducing its input costs. Its midstream business should also continue to grow regardless of near-term swings in the oil market.

That's why Chevron has raised its dividend annually for 39 consecutive years. If it maintains that streak for 50 years, it will become a Dividend King. It currently pays a forward yield of 3.8%.

Chevron expects to increase its oil and gas production by 2%-3% annually through 2030. That growth will be fueled by the expansion of its Tengiz Field in Kazakhstan, upgrades for its biggest oil field in the Permian Basin, new projects in Guyana (one of the world's fastest-growing oil regions), deepwater projects across the Gulf of Mexico, and natural gas projects in Australia. In other words, it still has plenty of irons in the fire.

From 2025 to 2028, analysts expect Chevron's EPS to grow at a 24% CAGR. Its stock still looks like a bargain at 12 times this year's earnings, and it's a stock I'd be comfortable holding for the long term, regardless of what happens to oil prices this year.

Leo Sun has positions in Energy Transfer. The Motley Fool has positions in and recommends Chevron and Enbridge. The Motley Fool recommends Occidental Petroleum. The Motley Fool has a disclosure policy.