Why Halliburton and Other Oil Stocks Rallied Today

Shares of oil and gas services firm Halliburton (NYSE: HAL) rallied as much as 4.7% on Friday, before settling into a 3.4% gain as of 12:30 p.m. ET.

Halliburton is the third-largest oilfield services company in the world, so any time oil prices go up, it's a recipe for potential further investment by oil companies in exploration, completion, and production enhancement services.

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So, it's no surprise that Halliburton was rising when oil prices spiked on Friday, following Israel's strike on OPEC+ country Iran.

Israel pummels Iran's nuclear and military capabilities

Last night and early this morning, Israel struck Iran's nuclear facilities and military complexes, along with targeted assassinations of top Iran Revolutionary Guard military officials and nuclear scientists.

While details are still becoming known, it's pretty clear the Israeli strikes have been very devastating for Iran. Of note, Iran is the fourth-largest oil producer in the OPEC+ cartel, and the world's third-largest producer of natural gas.

On Friday, oil prices were up 6.3% on the news of the strikes, even though a spokesperson for Iran said that the Israeli strikes hadn't targeted oil production facilities or refineries within the country -- only military and nuclear facilities. Nevertheless, the prospect of an escalating regional war in the oil-rich Middle East still led to a spike in oil prices today, which had fallen substantially to begin the year.

Image source: Getty Images.

Halliburton stock is cheap, but also for a reason

Amid the recent downturn in oil prices, Halliburton has delivered fairly lackluster results, with revenue down 6.7% in its recent quarter. That being said, Halliburton's stock valuation is also very low, at just 9.2 times trailing earnings and about 8.6 times this year's earnings estimates, with a dividend yield of 3.1%.

Like most oil stocks, Halliburton doesn't have great growth prospects, and is also cyclical. However, Halliburton and other oil stocks can effectively serve as a hedge against global wars that threaten oil supplies, as we're seeing today, while also paying a dividend along the way.

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Billy Duberstein and/or his clients have 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.