The latest projections from the International Energy Agency (IEA) suggest that demand for oil, gas and coal will peak before 2030.
“This is the first time that a peak in demand is visible for each fuel this decade — earlier than many people anticipated,” Fatih Birol, executive director of the IEA, wrote in an op-ed published in the Financial Times.
That forecast does not sit well with the Organization of the Petroleum Exporting Countries (OPEC).
“It is an extremely risky and impractical narrative to dismiss fossil fuels or to suggest that they are at the beginning of their end,” OPEC said in a statement.
“In past decades, there were often calls of peak supply and in more recent ones, peak demand, but evidently neither has materialized. The difference today, and what makes such predictions so dangerous, is that they are often accompanied by calls to stop investing in new oil and gas projects.”
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According to OPEC Secretary General Haitham al-Ghais, the IEA’s claims could have significant global repercussions.
“Such narratives only set the global energy system up to fail spectacularly. It would lead to energy chaos on a potentially unprecedented scale, with dire consequences for economies and billions of people across the world,” al-Ghais said.
OPEC argued that the IEA’s reasoning on fossil fuels is “ideologically driven” instead of fact-based. It also noted that fossil fuels still make up more than 80% of the global energy mix and that they provide “vital” energy security for the world.
OPEC’s statement came on the heels of recent surges in oil prices. If you share this perspective on the enduring importance of fossil fuels, you might want to pay close attention to oil stocks. Here’s a look at three that Wall Street finds particularly attractive.
Exxon Mobil Corp. (NYSE:XOM)
Commanding over $450 billion of market capitalization, Exxon Mobil is one of the largest players in the global oil and gas industry.
Shares enjoyed huge rallies in 2021 and 2022. And the latest rise in oil prices seems to give the stock more upward momentum: Over the past month, Exxon stock has climbed 8%.
The business continues to gush profits and cash flow.
According to the latest earnings report, Exxon earned $7.9 billion in profits in the second quarter. It also generated $9.4 billion of cash flow from operations and $5 billion of free cash flow.
The company is returning cash to investors, too. In the second quarter, Exxon paid $3.7 billion in dividends and spent $4.3 billion on share repurchases.
At the current share price, the stock yields 3.1%.
Morgan Stanley analyst Devin McDermott has an Overweight rating on Exxon and a price target of $124, implying a potential upside of 6%.
Devon Energy Corp. (NYSE:DVN)
Devon Energy is an independent oil and gas exploration and production company with operations focused onshore in the U.S.
In the second quarter, the company’s oil production reached an all-time high of 323,000 barrels per day.
For the quarter, the company’s operating cash flow totaled $1.4 billion. Free cash flow was $326 million.
“Our disciplined reinvestment rates allowed us to generate free cash flow for the 12th consecutive quarter, and we returned $690 million of capital to shareholders through a combination of dividends and share repurchases,” Devon CEO Rick Muncrief said in a statement.
The company’s latest quarterly dividend — to be paid on Sept. 29 — is 49 cents per share. Note that Devon pays a fixed-plus-variable dividend so the amount could change from one quarter to the next.
Stifel analyst Derrick Whitfield has a Buy rating on Devon and a price target of $79 — around 49% above where the stock currently sits.
Occidental Petroleum Corp. (NYSE:OXY)
Shares of Occidental Petroleum more than doubled in 2022. The company benefited from elevated oil prices. At the same time, it received more investor attention after Warren Buffett’s Berkshire Hathaway Inc. revealed a sizable stake in it last year.
Buffett bought more shares of Occidental in 2023, with Berkshire owning 224.1 million shares of the company at the end of June.
In the second quarter, Occidental produced 1.22 million barrels of oil equivalent per day, which exceeded the mid-point of its guidance range.
Buffett isn’t the only one to see potential in the oil giant. Truist Securities analyst Neal Dingmann has a Buy rating on Occidental and a price target of $80. Because shares currently trade at $66.26, the price target implies a potential upside of 21%.
Keep in mind that because of the volatile nature of commodity prices, even the largest oil companies can experience significant fluctuations in their share prices. If you appreciate the generous shareholder returns offered by the oil sector but aren’t a fan of such volatility, it might be worth exploring reliable income plays outside the stock market, such as investing in rental properties with as little as $100 while staying completely hands-off.
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This article ‘Dire Consequences’ For Billions: OPEC Blasts IEA’s Fossil Fuel Demand Forecast, Warns Of ‘Energy Chaos’ On Unprecedented Scale — 3 Top Oil Stocks From Wall Street originally appeared on Benzinga.com
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