Global crude prices have soared on supply worries caused by Russia’s invasion of Ukraine. The conflict is highlighting the tightness of crude stocks and persistently robust demand (short-term disruptions notwithstanding). With oil prices likely to stay high, support for energy stocks could continue, says Research Analyst Noah Barrett.

Key takeaways:

  • With Russia a top-three producer of global crude, the country’s invasion of Ukraine has created worries about a steep drop in oil supplies at a time when demand for crude continues to recover from pandemic lows.
  • Indeed, the Russia/Ukraine conflict has cast a light on the tightness of global oil supplies after years of under-investment by the energy industry. Meanwhile, demand for crude is expected to rise over the coming decade.
  • In our view, the supply/demand imbalance could keep oil prices elevated and create a positive backdrop for the energy sector, particularly exploration and production companies.