best oil investments

5 Best Oil Investments Right Now In 2022

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Inflation is currently at a 40 year high which has sent prices skyrocketing everywhere. One of the areas hit the hardest is gas prices, which are now nearing a 7 year high. This is rather shocking, considering gas prices were at a 20 year low in the Spring of 2020.

Tensions in Russia have also led to sanctions, which are essentially financial punishments imposed on a country. Germany, for example, has halted a major Russian gas pipeline Nord Stream 2, which has put further upward pressure on oil prices.

While I don't believe in the long term future of fossil fuels personally, the short term trend for oil and other commodities is upward. I personally expect this to continue in months ahead.

As a result of the increase in oil prices, many investors are looking to get exposure to the oil business.

Here's a few ways you could accomplish this right now, including an investment I have made myself.

Where To Buy Oil Stocks?

If you are looking to invest, be sure to check out M1 Finance. This is where I have the majority of my stock market investments.

You are able to purchase all of the investments listed here over on M1 Finance commission free. As an added benefit, you can also enable automated dividend reinvestment.

A lot of oil stocks and funds pay above average dividends, so you may want to consider reinvesting dividends in order to earn compound interest.

Be sure to check out my free M1 Finance video training to learn how to get started!

1. Global Partners LP (GLP)

Of all the investments mentioned on this list, this is the only one I own personally.

This company is organized as a master limited partnership, which is common among energy investments. They are involved heavily in the petroleum business, but also have involvement in the convenience store business.

  • Global Partners owns 21 gas terminals
  • One of the largest branded and unbranded gas suppliers in the Northeast
  • They also own nearly 300 convenience stores including the new Alltown Fresh brand
  • Dividend yield of 9.2%

A master limited partnership or MLP takes the business formation of a partnership and makes it publicly tradable. This gives you the tax benefits of a partnership with the liquidity of a stock.

2. Exxon Mobil Corp (XOM)

Next we have the most well known oil and gas company, Exxon Mobil. This company is also the largest direct descendant of Rockefeller's Standard Oil.

  • Exxon Mobil has the ambitious goal of having net zero emissions by 2050
  • They are involved with the exploration, development and distribution of oil, gas and other petroleum products
  • Company has major exposure to prices for energy commodities (volatility)
  • Dividend yield of 4.5%

3. BP plc (BP)

BP, or British Petroleum, is a global gas company based out of London, England. A key difference between BP and other oil companies is their focus on renewable energies. They have the ambitious goal of becoming a global leader in renewables, just as they have with oil.

  • All oil companies have some focus on renewables, as the future for oil is uncertain
  • BP seems to have the biggest focus on this transition overall
  • This company also owns a portfolio of different gas stations as well as other gas assets such as terminals
  • Dividend yield of 4.3%

4. United States Oil Fund LP (USO)

USO invests primarily in futures contracts. These are common with commodities out there such as oil. With a futures contact, two parties agree to buy or sell a certain commodity at a predetermined price and set time in the future.

  • This fund tracks the price of West Texas Intermediate Crude as closely as possible
  • The goal of this fund is to follow the price of oil as closely as possible through the use of investments such as futures contracts on oil
  • Keep in mind, this fund solely invests in futures, swaps and other complicated financial assets
  • Should mostly be used for short term trades related to the price of oil
  • Not yield bearing, no dividend

5. iShares Global Energy ETF (IXC)

Inflation is pushing up the costs of energy prices across the board, not just oil. Another option you have for oil exposure is investing in an Energy ETF. This is a fund that owns dozens of different stocks within it, giving you diversification across multiple companies.

  • IXC gives investors exposure to companies that produce and distribute oil and gas
  • There are 62 individual holdings within the fund
  • Includes companies such as Exxon Mobil, Chevron, Shell and more
  • iShares collects a management fee of 0.43%
  • Dividend yield of 4.2%
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