The Best Oil and Gas ETF to Invest $1,000 in Right Now
Geopolitical tensions in the Middle East don't look like they're going to ease anytime soon. Oil explorer and producer stocks provide the best value in this scenario.
The Best Oil and Gas ETF to Invest $1,000 in Right Now
Overview
The Iran war shut down the Strait of Hormuz in late February. Brent crude oil went from around $70 a barrel to briefly over $120 in a matter of days. The SPDR S&P Oil & Gas Exploration & Production ETF (NYSEMKT: XOP) is up nearly 34% year to date over the same stretch, and soaring oil prices are the catalyst.
Understand, however, that oil and explorers don't see their stock prices correlate directly with oil. That's because they're corporations, not commodities, and they've likely hedged their oil price exposure months earlier
Details
But with even higher oil prices a distinct possibility, the environment for explorers and producers to translate those higher prices to the bottom line improves. The International Energy Agency (IEA) has called this the "largest disruption in history." The Iran war shows only on-and-off signs of reaching a resolution, and higher oil prices are not yet fully baked into this sector.
Source
Originally published at www.fool.com.
