Why ExxonMobil Stock Soared More Than 11% in March

Shares of ExxonMobil (NYSE: XOM) rallied 11.3% in March. Surging crude prices were the main factor fueling the oil behemoth last month. However, rising oil prices weren't the only catalyst driving up Exxon's stock price.

Here's a closer look at what fueled the oil stock's surge last month, and whether an investment in ExxonMobil still makes sense after last month's rally.

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Oil's best month since the pandemic

Crude oil prices soared last month after the U.S. and Israel launched military attacks against Iran. Brent oil, the global benchmark price, surged 43% in March, closing at almost $104 per barrel, its best monthly gain since May 2020. Meanwhile, WTI, the U.S. oil benchmark, soared 51% last month, also its best month since 2020. Crude prices have continued to rally in early April, already more than doubling this year.

Iran has responded to the military strikes by launching attacks against the energy industry. It has hit tankers exporting oil from the Persian Gulf through the Strait of Hormuz. As a result, that waterway has effectively closed, choking off 20% of the world's oil and liquefied natural gas (LNG) supplies. Iran has also launched attacks against energy infrastructure in the Gulf, including destroying some LNG facilities in Qatar.

Higher oil prices will benefit ExxonMobil. The energy giant has spent the past several years focused on becoming more profitable at lower oil prices by delivering structural cost savings and investing in high-margin projects. As a result, it will make a lot more money now that prices are much higher.

Exxon's other March catalysts

Oil wasn't the only noteworthy news for ExxonMobil last month. The oil giant said in early March that it was interested in returning to Venezuela if the right investment terms were in place. The company believes it can be even more successful in the country this time due to its improved technical expertise in working with heavy oil, such as that produced in Venezuela. Securing a deal to return to Venezuela would further enhance the company's long-term growth profile.

Meanwhile, Exxon and its partner, QatarEnergy, completed the first LNG train at their Golden Pass joint venture project in Texas last month. The facility will have an initial capacity of 6 million tonnes per annum (MPTA). Once fully operational, Golden Pass can produce 18 MTPA of LNG per year. The long-delayed project couldn't have come online at a better time. The war with Iran has significantly impacted Qatar's LNG operations, including damaging two facilities QatarEnergy co-owns with Exxon.

Exxon is still a buy

Shares of ExxonMobil soared in March and are now up more than 30% this year. Despite that surge, Exxon has significantly underperformed the rise in crude prices. As a result, it could have much more upside if oil remains high, since it can make significantly more money in that environment. That untapped upside makes ExxonMobil stock still compelling even after its recent surge.

Matt DiLallo 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.