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Gas prices are surging amid the events of an escalating war in the Middle East that has already engulfed nearly half of the member states of the Organization of Petroleum Exporting Countries (OPEC). That could drive up expenses for many consumers, but it could also make investors in oil & gas stocks a little wealthier.
Oil and natural gas stocks, like the companies they represent, generally do better if energy prices are high. And their long-term outlook is deeply enmeshed with geopolitical, economic and regulatory factors beyond any one company’s control.
“There’s a huge amount of the oil industry that is devoted to the internal combustion engine,” says Michael Jones, who is chief executive of Caravel Concepts, a maker of asset allocation software for financial advisors. “When you buy into the energy space, you are buying into a gale-force headwind in terms of the long-term industry prospects.”
Best-performing oil and gas stocks
These are the five oil and natural gas stocks in the S&P 500 Index with the best one-year performance.
Tip: You'll need a brokerage account to buy any oil stocks. You can learn more about opening a brokerage account here.
| The best-performing S&P 500 energy stock by one-year return is APA Corp (APA), which is up 169.29%. | ||||
|---|---|---|---|---|
| Ticker | Company | Performance (Year) | ||
| APA | APA Corp | 169.29% | ||
| VLO | Valero Energy Corp | 111.16% | ||
| HAL | Halliburton Co | 110.93% | ||
| BKR | Baker Hughes Co | 87.29% | ||
| MPC | Marathon Petroleum Corp | 78.49% | ||
| Source: Finviz. Data is current as of May 5, 2026, and is intended for informational purposes only. | ||||
Is it a good idea to invest in oil stocks?
Buying oil and gas stocks isn’t for everyone. Here are some pros and cons of oil stocks.
Pros:
- Dividends: Oil stocks tend to have high yields for their investors. In flush times, companies across the industry will distribute a good proportion of their profits to shareholders, rewarding those who stuck around when times were tougher. Learn more about dividends here.
- Portfolio balance: The performance of oil stocks and the energy sector as a whole may not correlate with the broader market, meaning holdings in the energy sector could buoy losses from those elsewhere.
Cons:
- Volatility: Oil stocks can swing dramatically along with the market for oil. If you’re buying oil stocks, you should be comfortable with the possibility that your investments will lose value.
- Geopolitics: Energy companies operate all around the world, and that means they rely on the sometimes fragile relations between countries where oil is produced, countries that control distribution routes, and countries where consumers live. For example, the Russian invasion of Ukraine led to upheaval in the oil market. While this has led to higher prices, and some gains for oil companies, it also has the potential to reorient the global energy situation in ways that no one firm can control or even predict.
- Environment and regulation: Nations around the world are working to transition away from fossil fuels in the hopes of blunting the effects of climate change. Though this is a slow process, over time it could mean a lot less oil is produced and sold. And in the shorter term, demand for equities in fossil fuel companies could potentially be affected by moves toward sustainable investing, both by individuals and institutions such as pension funds.
» Learn more: Environmental, social and governance investing
5 types of oil stocks
Most oil and natural gas stocks fall into one of a few major categories. There are companies that find and extract the resource, companies that provide oilfield services, companies that refine oil and gas and integrated companies that do it all. In addition, there are some specialized companies that own and operate oil pipelines.
1. Exploration and production
Companies that look and drill for oil are among the most volatile stocks in the oil space, Jones says, and their prices are very responsive to short-term trends. This can be a benefit if you buy at the right time or if the company you’re investing in makes a significant discovery of natural resources.
But shares in oil and gas producers can also be vulnerable to downturns in the oil market that affect their ability to make a profit on what they pull out of the ground.
2. Oilfield services
These are companies that make equipment used in the massively complex process of drilling and extracting oil. This includes drilling gear, testing and safety tools, and other heavy-duty components.
Oilfield services companies can also see big swings in profitability driven by oil prices. If oil prices go down, drilling becomes less profitable, and producers are less likely to spend money on equipment and services. If the price goes up, producers may spend more on oilfield services as they try to reach reserves that are more difficult to extract.
3. Refining
Refining companies operate the facilities that turn crude oil into products such as gasoline. These companies can do quite well in favorable market conditions. Since they have to buy oil well in advance of the time they receive, refine and sell it, they can make good returns amid rising prices.
However, when prices go down, that dynamic is reversed. Refiners can wind up charging less for their products than they cost to make.
4. Integrated oil companies
Integrated oil companies have some aspects of production, services and refining all in-house. This can mean that their risks are spread out more broadly than companies that specialize in one aspect of the oil industry.
Nonetheless, their prospects can vary considerably because of the price of oil.
5. Master limited partnerships
Master limited partnerships, or MLPs, are publicly traded companies that own pieces of energy infrastructure such as pipelines. These tend to pay high dividends, Jones says, and they are popular with retail investors. Their prices can be volatile, though.
» Get started: See the best online brokers for stock trading.
Alternatives to oil stocks
Generally speaking, it is relatively risky to buy individual stocks rather than index funds that provide broader exposure to the market. If you believe oil and gas companies will do well but aren’t sure which ones to pick, you could also consider investing in an exchange-traded fund linked to oil.
If you’re looking for more direct exposure to oil, you can consider looking to the commodities market, where there are products such as oil futures for sale. Jones, however, says such investments can be risky for retail investors.
Prices on the futures market represent the beliefs of sophisticated investors who have detailed knowledge of oil discovery, production and shipping.
“They understand these complexities a whole lot better than you do,” Jones says. “If you think you can compete with them, God bless you.”
How to buy oil stocks in 4 steps
If you don’t already work with a stockbroker and you want to buy oil stocks, you’ll need to go through the following steps.
1. Choose a stockbroker
There are several online brokers that can help you buy stock in oil companies. The best one for you will depend on your specific needs. Here are some tips on how to open a brokerage account.
» Ready to get going? Review NerdWallet’s best online stockbrokers
2. Fund your account
Online stockbrokers may allow people to transfer money onto their platforms using bank transfers, ACH transactions, debit cards and credit cards. Before you buy, make sure you check the fees for the type of payment you intend to use.
And note that it can be especially risky to purchase volatile investments using high-interest debt such as credit cards. If your investments decline in value, you’ll still owe interest on the price you paid for them — deepening your losses.
3. Do your research
It’s a good idea to read up on the stocks you want to buy before you dive in. Industry news coverage, analyst reports and company financial statements can help you get more comfortable with your decision.
4. Buy the stock
You should be able to locate the stock you are looking for using its ticker symbol. From there, your broker’s website should be able to walk you through the rest of your purchase.
» See our full guide on how to buy stocks
Neither the author nor editor held positions in the aforementioned investments at the time of publication.
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