Oil Prices Haven't Been This High Since 2022. This Blue Chip Stock Soared 80% That Year

Whenever there's a conflict in the Middle East, it has the potential to disrupt the supply of oil and thus lead to an increase in commodity prices. And when that happens, many oil and gas producers benefit not only from greater revenue and more profit, but their share prices also get a boost.

Recently, the price of crude oil climbed to more than $100 per barrel, the first time it has done so since 2022. And although it has come down from that high and on Tuesday was back to around $86, with the war in Iran still potentially impacting oil production, there's still the possibility for oil prices to rise higher again. A year ago, the price of crude oil was less than $70.

One stock that benefited significantly from a rise in oil prices back in 2022 was ExxonMobil (NYSE: XOM). The oil and gas giant soared an incredible 80%. Is it poised for another huge rally this year?

Image source: Getty Images.

Will ExxonMobil stock have a strong year in 2026?

Unsurprisingly, ExxonMobil stock has been rallying in the early part of the year. As of Tuesday, it was up around 26% while the S&P 500 had fallen by around 1%. The oil and gas giant is once again trouncing the market amid a rise in oil prices.

ExxonMobil is likely to do well this year if oil prices remain high, not only because it is a leader in the oil and gas industry, but also because many investors see it as a safe investment amid inflation due to its growing dividend. ExxonMobil has been raising its payout for decades, and it currently yields 2.8%, which is more than double the rate of the S&P 500 average (1.2%).

Plus, even with the increase in price, the stock isn't overly expensive, as its price-to-earnings multiple is 23. And if oil prices remain high, its earnings numbers are going to get even stronger in the near future.

ExxonMobil is a good stock to buy, regardless of where oil prices are headed

Buying a stock based on commodity prices can be risky because they can fluctuate significantly. If the war in Iran ends soon, oil prices can quickly come back down. There can be some volatility that comes with investing in oil and gas stocks, which you need to accept if you want to invest in ExxonMobil. In each of the past three years, for instance, it has underperformed the market.

However, the stock can offer a good way to diversify your portfolio and collect a solid, reliable dividend. For those reasons, I think it's still a stock worth buying, even if oil prices come down this year. As long as you're looking at the long run and not a short-term trade, ExxonMobil stock can undoubtedly be a great investment to add to your portfolio.

David Jagielski, CPA 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.