XOM, CVX, TTE : Time To Buy Oil Stocks?
It’s been a while since I last covered oil stocks. It is time for a revisit.
OPEC Meeting.
On 30 Nov 2025, the OPEC+ members held their planned meeting.
Consensus from the meeting is OPEC+ will be to pause planned increases in oil production for Q1 2026.
The tactical move that follows a modest 137,000 bpd increase implemented in December 2025, is a defensive measure to (a) counteract potential seasonal demand weakness and (b) a projected global supply glut.
Another key long-term takeaway was the formal approval of a new mechanism to assess member countries' maximum sustainable production capacity (MSC).
Starting in early 2026, this technical assessment will serve as the baseline for setting output quotas for 2027 and beyond, aiming for a fairer and more transparent distribution of production targets.
OPEC+ alliance reaffirmed its commitment to market stability and the collective goal of achieving full conformity with existing output agreements.
Next Meeting.
OPEC+ will meet again on 04 Jan 2026 to review market conditions and conformity.
In the meantime, where does that leave oil stocks listed on the US exchange as we look towards 2025 exit and 2026 entrance?
In this post, I will focus on:
As 2025 draws to a close, market expectation for major oil stocks like XOM, CVX & TTE, appears to be one of (a) caution and (b) potential pressure.
This is due to projected oversupply in the crude oil market and lower forecasted oil prices.
Key Expectations Breakdown:
1. Oil Price Forecasts (Key Driver)
Consensus among several major forecasters suggests a decline in crude oil prices through 2026, which would naturally put pressure on profits and stock performance of oil majors:
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US Energy Information Administration (EIA): Forecasts Brent crude oil to fall to an average of $55 per barrel (bbl) in Q1 2026 and remain near that price for the rest of 2026.
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JP Morgan Research: Projects Brent at $66/bbl for 2025 and $58/bbl for 2026.
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Overall, many analysts are predicting a bearish trend with oil prices potentially averaging in the mid-to-low $50/bbl in 2026.
Price Weakness Stems From:
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Supply Growth: Increasing global oil production, notably from non-OPEC+ countries (like US, Brazil, and Guyana), and the planned unwinding of production cuts by OPEC+ members.
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Inventory Builds: Global oil inventories are expected to continue rising through 2026, creating a surplus that weighs on prices.
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Tepid Demand Growth: Global liquid fuels consumption growth is expected to be modest, driven mainly by non-OECD countries (mostly Asia).
2. The Impact.
If oil prices fall as forecasted, it translates to a challenging environment for oil stocks:
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Lower Profits: Lower crude oil realizations directly reduce the revenue & profit margins for upstream (exploration and production) operations, that are a major component of these companies' earnings.
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Returns at Risk: XOM & CVX have prioritized returning capital to shareholders through dividends and share buybacks. Lower oil prices may challenge the sustainability of aggressive buyback programs, as some analysts expect further buyback cuts into 2026.
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Focus on Cost and Discipline: The major companies are expected to continue focusing on (a) cost-cutting, (b) capital discipline, and (c) portfolio restructuring to protect margins and manage volatility.
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For example, XOM has raised its 2030 plan for higher earnings and cash flow but at the assumption of a $65 real Brent price.
3. Companies Strategies
Despite the bearish oil price outlook, oil companies are pursuing strategies aimed at long-term resilience:
ExxonMobil (XOM):
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Has raised its 2030 plan, projecting double-digit cash flow growth and a return on capital employed over 17%.
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XOM is focused (a) on its advantaged, low-cost assets (like Guyana and the Permian Basin) and (b) is pursuing low-emission investments.
Chevron (CVX):
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Analyst estimates for 2025 and 2026 EPS have been ticking higher, factoring in quicker synergy capture and production ramp-up from its acquisition of Hess Corp.
TotalEnergies (TTE):
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Expected to focus on a diversified portfolio that includes integrated power (renewables, gas-to-power) alongside its core oil & gas operations.
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With a target for over 3% production growth in both 2025 & 2026.
In summary, the market's expectation is that the macro environment (crude oil prices) will be a significant headwind for oil stocks through 2026.
Analysts’ Consensus.
With the above in mind, below are analysts’ ratings and price targets for the 3 oil stocks.
My personal viewpoints: (mine only)
At first glance, I find contradictions between analysts’ assessment vs forecast.
On the one hand they are talking about oil prices weakening from end 2025 and into 2026, that is pessimistic.
Yet when it comes to forecast, their ratings and average 1-year price targets, they are relatively optimistic.
However, on closer examination the 2 assessments have different focus:
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Equity analysis (stock ratings) focuses on long-term value of the company.
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Commodity forecasting focuses on short-term market for a product.
It means, despite the expected pressure from lower crude oil prices in 2026, analysts are confident that the 3 major integrated oil companies are structured well, via low-cost production and strong shareholder return policies.
This warrants a Hold / Buy rating, suggesting modest to moderate upside from current price levels in 2026.
Best Oil Stock.
Assuming analysts’ overall assessment of oil stocks is ‘spot on’, there’s still the question - which of the 3 oil stocks to consider. (see below)
ExxonMobil.
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It shows the strongest performance (+11.46%) out of the 3 ringfenced oil stocks. (see above)
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Delivers the highest total return among the peers due to its aggressive cost-cutting targets, high-margin projects (Guyana), and industry-leading share repurchase program.
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On the other hand, CVX over a 3 year period, registered a negative return of -12.52% (see above)
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It is highly regarded for its dividend consistency (38 consecutive years of increases) and robust balance sheet, offering a slightly higher dividend yield (4.56%) than XOM (3.54%), that appeals to income investors.
TotalEnergies.
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Like XOM, TTE registered a +9.67% gain to its stock price over the past 3 years. (see above)
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Comparatively speaking, I like TTE because of its more balanced approach, with big investments in integrated power & renewables.
I believed green energy will keep growing as costs drop and demand rises to cut pollution.
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However having a balanced approach also meant TTE did not benefit as much from the sharp rise in oil & gas prices back in 2022 and 2023 but did not fall either.
I will wait and observe the market for a while, because analysts predict oil prices will be lower in 2026, and Western economies are expected to grow slowly (less than 1.7%). What about you ?
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