Energy Stocks Rise as Oil Jumps on Middle East Tensions

Shares of energy giants, including ExxonMobil (XOM) and  Chevron (CVX), are extending gains in premarket trading Wednesday as worries of a broader Middle East conflict lift oil prices. 

Crude prices are rising around 3% after Iran launched a ballistic missile attack on Israel. Brent crude futures surpassed the $75-per-barrel level they briefly crossed Tuesday on fears of supply constraints, while the U.S. benchmark, West Texas Intermediate (WTI), is at almost $72 per barrel.

UBS Says Oil Positions Can Hedge Against Worsening Crisis

The conflict in the Middle East, apart from raising humanitarian concerns, has “contributed to periods of market volatility, amid concerns that a regional war could interrupt oil supplies,” UBS Global Wealth Management Chief Investment Officer (CIO) Mark Haefele said in a note.

Haefele said that while the firm’s base case isn’t for an all-out war, “positions in oil can serve as a portfolio hedge against a worsening crisis in the Middle East, while market fundamentals are also positive.”

ExxonMobil shares, which have gained almost 20% year-to-date, were rising 1.7% in premarket trading. Those of rival Chevron, whose $53 billion acquisition of Hess (HES) was cleared this week, are up around 1.6%. Shares of Occidental Petroleum (OXY) and ConocoPhillips (COP) are rising around 1.4% and 1.6%, respectively.