US-Israel War and UK Yields Expose Crude Price Shocks in Oil Stocks

The ongoing US-Israel war on Iran and rising UK gilt yields are causing significant changes in inflation and borrowing costs, affecting oil markets. This mix is making some energy producers winners while others suffer losses.

Three stocks that are exposed to these shocks are Tullow Oil (LSE:TLW), Pharos Energy (LSE:PHAR), and Jadestone Energy (AIM:JSE). These companies give investors direct crude price exposure through their upstream production activities in Ghana, Vietnam, Egypt, Australia, Malaysia, Indonesia, and other countries.

Tullow Oil generates most of its income from Ghana assets, which contributed $833 million out of roughly $847 million in segment revenue. However, the company's core oil-focused business faces structural decline due to governments' push towards decarbonization and emissions targets.

Pharos Energy offers pure upstream oil and gas exposure within the screener, focused on production in Vietnam and Egypt, with about $100 million coming from Southeast Asia and $15 million from Egypt. The company expects its largest Vietnam development and appraisal drilling campaign to move production from decline management to incremental volume growth from 2025.

Jadestone Energy is a pure upstream player developing and producing oil and gas across Australia, Malaysia, Indonesia, and Vietnam. The company has a growing Asia Pacific footprint and aims to uniquely capitalize on the ongoing global underinvestment in upstream oil and gas, supporting stronger long-term cash flows and asset revaluations.

The performance of these companies depends on how one pressure point or another resolves over the next few years, which could impact their future profitability and cash generation. Investors should consider these factors when evaluating these stocks for potential exposure to crude price shocks.