These 3 Oil Stocks Surged in the First Half of 2026. Here's the Best One to Buy for the Second Half.

No one should doubt the power of the law of supply and demand. We've seen it in action so far this year. The Iran war -- particularly the resulting disruption in traffic through the Strait of Hormuz -- has negatively impacted oil supply. Unsurprisingly, fuel prices have risen significantly.

This dynamic, though, has made oil stocks big winners. Shares of ExxonMobil (NYSE: XOM), Chevron (NYSE: CVX), and Occidental Petroleum (NYSE: OXY) surged in the first half of 2026. Here's which one of these stocks could be the best to buy for the second half of the year.

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How these oil stocks stack up

Occidental Petroleum has delivered the most impressive year-to-date performance among these three stocks. That's primarily due to its greater sensitivity to crude oil prices, which is a direct result of the company's upstream focus. ExxonMobil and Chevron, meanwhile, have been neck-and-neck with similar strong gains in 2026.

Have the exceptional returns caused valuation issues for the stocks? Nope. ExxonMobil is the most expensive of the group, but with shares trading at only 14.3 times forward earnings. Chevron's forward price-to-earnings ratio is 13.6. Oxy looks downright cheap with its forward earnings multiple of 10.5.

All three of these oil producers pay dividends. Chevron will probably be the most appealing to income investors, with its forward dividend yield of 3.7% and 39 consecutive years of dividend increases. ExxonMobil is in contention, though, with a yield of 2.6% and 43 consecutive years of dividend hikes. Occidental's dividend yield is a much lower 1.8%. The company has also increased its dividend for five consecutive years.

Wall Street is generally bullish about all three stocks. Occidental claims the highest upside based on consensus 12-month price targets. However, Chevron isn't too far behind. It also has the highest percentage of "buy" and "strong buy" analyst recommendations of the group.

The runners-up

How do these oil stocks rank for the second half of 2026? You might be surprised that I have put Occidental in third place despite its top performance and low valuation.

The main knock against Oxy, in my view, is that it's riskier than ExxonMobil or Chevron because of its heavy upstream focus. If oil prices fall -- and I think they may later this year -- Occidental's stock would be affected the most of the three.

I selected ExxonMobil as my No. 2 pick for the second half of the year. It's the world's second-largest energy company based on market cap, trailing only Saudi Arabian Oil (SASE:2222), better known as Saudi Aramco. I like ExxonMobil and own shares. However, I think that Chevron looks more attractive right now.

Why Chevron takes the top spot

As I mentioned earlier, Chevron is Wall Street's favorite among these three stocks. It also pays the most attractive dividend. But those aren't the only reasons I think Chevron deserves the top spot.

For one thing, Chevron is outperforming its competitors on some key fronts. In recent years, the company has delivered the highest growth in cash flow from operations among its peers. It has also generated the highest production compound annual growth rate.

Chevron's acquisition of Hess has transformed the company's production capacity. It now has significant exposure to one of the world's highest-return areas -- Guyana. This deal provides the company with a long-term competitive advantage, in my opinion.

Microsoft (NASDAQ: MSFT) selected Chevron to co-develop a facility to power a West Texas data center for 20 years. I view Chevron as one of the best major oil companies poised to benefit from the continued energy demand driven by data centers.

Chevron's management expects to grow earnings per share and adjusted free cash flow by more than 10% per year. The company plans to keep buying back between 3% and 6% of its outstanding shares annually. And it can continue paying dividends at the current level and funding capital projects even if oil falls below $50 per barrel.

Simply put, I think investing in Chevron offers the best risk-reward proposition. ExxonMobil and Occidental Petroleum could deliver greater gains in the second half of 2026, but my money is on Chevron to be the bigger winner over the next few years.

Keith Speights has positions in Chevron, ExxonMobil, and Microsoft. The Motley Fool has positions in and recommends Chevron and Microsoft. The Motley Fool recommends Occidental Petroleum. The Motley Fool has a disclosure policy.