Oil Stocks Rebound as Strait of Hormuz Concerns Send Prices Soaring

Oil prices have recently swung sharply after Iran floated a restrictive plan for the Strait of Hormuz, causing concern among investors. This sudden move can quickly reshuffle winners and laggards across global markets.

The article examines three stocks exposed to this news: Kolibri Global Energy (TSX:KEI), Ovintiv (OVV), and Murphy Oil (MUR). Each company has a unique story, but they are all closely tied to oil price movements.

Kolibri Global Energy is a small energy producer focused on developing its Caney Shale oil acreage in Oklahoma. It generates nearly all of its revenue from oil and gas exploration and production in the United States, making it sensitive to WTI pricing. Despite forecasts pointing to higher earnings and revenue, profit margins have come under pressure, and return on equity remains modest.

Ovintiv is a large North American oil and gas producer focused on shale assets in the Permian and Anadarko basins in the U.S. and the Montney in Canada. It has been growing earnings faster than both the wider oil and gas sector and the U.S. market, cutting net debt to about US$3.0b and returning significant free cash flow through buybacks and a rising dividend.

Murphy Oil is a pure play exploration and production company that focuses on finding and producing crude oil, natural gas, and natural gas liquids across the U.S., Canada, and international basins from its Houston headquarters. Its oil-weighted portfolio is highly sensitive to any move in crude prices triggered by events such as the Strait of Hormuz headlines.