How to profit from higher oil prices

Oil prices have risen sharply since the outbreak of the conflict in Iran, and the chances are that you’ve felt the consequences in your portfolio as well as at the pump. But some investments can offer at least a measure of protection against higher oil prices.

Brent Crude oil futures have closed above $90 every day since 11 March, with the conflict in Iran having effectively closed the Strait of Hormuz – a critical shipping lane through which around 20% of the world’s oil passes.

“The huge disruption to oil and natural gas supplies in the Middle East over the past three months has materially tightened energy markets near-term,” said Mark Hume, co-manager of BlackRock Energy and Resources Income Trust. “The impact on liquified natural gas exports, primarily to Asia, has been even more pronounced.”

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When oil prices rise, some of your other investments are likely to fall.

Given most of the world’s industry relies on oil and gas as inputs, higher oil prices have caused chaos in most stock markets and economies.

But high oil prices aren’t bad news for everyone. Some companies – such as oil and energy suppliers – could profit from higher oil prices.

British oil major BP (LON:BP.), for example, reported on 28 April that its underlying replacement cost profit (a measure commonly used by oil and gas companies that factors out inventory gains and losses) more than doubled to $3.2 billion in the year to Q1 2026.

BP’s profit jump was boosted by higher prices, according to Mark Crouch, market analyst at investment platform eToro.

“In many respects, BP has both absorbed and benefited from the same geopolitical tensions, with volatility once again proving a tailwind for an integrated major,” said Crouch.

Its success saw BP make the list of the most popular stocks among DIY investors using Interactive Investor’s platform during May.

How else can you profit from oil and energy price rises, and compensate for all the increased cost that rising energy bills and petrol prices bring?

The risks of investing in oil

Before going into how to invest in oil and energy you should remember that, as recent events have proven, oil prices are highly volatile.

“Investing [in oil and energy] via an exchange-traded product (ETF) that aims to follow the price can risk being whipsawed,” said Rob Morgan, chief investment analyst at Charles Stanley Direct.

Morgan also cautioned that many investors might already have reasonable oil exposure within their portfolios, if (for example) they hold assets tracking the FTSE 100 which includes several oil majors like Shell (LON:SHEL) and BP.

“It is important to avoid unwittingly doubling up on exposure,” said Morgan.

How to invest for higher oil prices

That said, it could make sense, depending on where else you are invested, to allocate a small part of your portfolio to focused oil investments in order to shield yourself from price shocks and the consequent inflation.

“Energy equities can protect a portfolio in certain inflationary scenarios but can also underperform for long stretches when the commodity cycle turns or policy shifts,” said Morgan. “This is why they should generally only be held in small quantities, for instance up to 5%.”

As well as holding oil price-friendly assets, it is also important to remain diversified.

“Diversification and explicit geopolitical hedges remain essential,” said Daniel Casali, chief investment strategist at wealth manager Evelyn Partners. “These include gold, hedge funds, inflation‑linked bonds, short‑duration sovereign bonds and energy equities.”

If you feel your portfolio could do with a barrel or two of extra oil price exposure, then there are several ways you can add it:

• Oil and energy stocks like Shell, BP or Harbour Energy (LON:HBR). These stocks gained 5.8%,19.8% and 12.5% respectively between 27 February and 27 April.
• Funds or ETFs that invest in oil and energy companies, offering diversified exposure to stocks like these. Some examples are the SPDR MSCI Europe Energy UCITS ETF (LON:ENGE), which tracks large- and medium-cap energy companies in Europe, and the iShares Oil and Gas Production UCITS ETF (LON:SPOG), which has a broader international footprint (nearly three quarters of holdings are based in the US and Canada, with most of the rest hailing from Australia, Japan and Norway).
• An exchange-traded commodity (ETC) can act as a simple way to track the oil price. One example is WisdomTree WTI Crude Oil (LON:CRUP), which offers investors total return exposure to WTI Crude Oil futures contracts.

Additionally, several investment trusts offer exposure to oil and energy companies. These include:

^{Source: theaic.co.uk / Morningstar (as at 21/05/2026 based on latest available published portfolio weights).}