A number of low-capitalization oil stocks are trending higher today as the price of crude oil spikes to an eight-year high on news that Russia has attacked neighboring Ukraine.
Shares of stock such as Imperial Petroleum (NASDAQ:IMPP), Camber Energy (NYSEMKT:CEI) and Indonesia Energy (NYSEMKT:INDO) are each up more than 30% in trading today as crude oil prices top $100.
Shares of several oil majors, such as Chevron (NYSE:CVX) and ExxonMobil (NYSE:XOM), were each up more than 3% in pre-market trading before reversing course.
What Happened With Oil Stocks
Oil prices jumped higher on news that Russia has attacked Ukraine, with West Texas Intermediate crude oil futures trading at more than $98 per barrel. Global benchmark Brent crude oil jumped to $103.75 per barrel, passing the $100 level for the first time since 2014. That news has the stocks of oil producers moving higher today amid a global selloff in markets.
Russia is a major supplier of oil to countries such as Germany and France, and the prospect of war has sent oil prices skyrocketing. Additionally, the global response to the Russia-Ukraine conflict has created other supply challenges. For instance, Germany announced that it is halting certification of the Nord Stream 2 gas pipeline. The 750-mile pipeline was completed last September but has not received final certification from German regulators. Without that certification, natural gas cannot flow through the pipeline from Russia to Germany.
Why It Matters
Energy stocks have been some of the few winners so far in 2022. Even before today’s sharp selloff in global equities, markets around the world had been on the decline. In fact, both the S&P 500 and Nasdaq were officially in correction territory. However, the escalating crisis in Ukraine has helped push the price of crude oil steadily higher, which has been a positive catalyst for oil producers and their share prices. The level of $100 per barrel is seen as a key threshold for global oil prices.
Low-cap oil stocks are seeing a particular boon today. For stocks such as IMPP, CEI and INDO, this is good news. Even before today’s move higher, Indonesia Energy’s stock was up 164% year to date. However, Imperial Petroleum was down 57% on the year, and Camber Energy was down 34%. These stocks are likely to continue moving higher in the near term, mirroring the rise in oil prices.
What’s Next for CEI, IMPP, INDO
As go oil prices, so too go the stock prices of oil companies. Oil producers large and small are likely to continue seeing gains in the short term as the Ukraine crisis intensifies and the price of crude oil continues to increase. However, any gains could be short-lived if the Russian attacks end quickly or the Organization of the Petroleum Exporting Countries (OPEC) increases global supply. Investors should continue monitoring oil prices closely in coming days.
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On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
