Oil prices unlikely to drop before 2027 — 2 US upstream stocks to buy

Energy executives and market commentators are warning that supply disruptions tied to the Middle East could keep oil prices elevated well into 2027, a dynamic that makes U.S.-based upstream producers such as Devon Energy and Diamondback Energy attractive to some investors.

The narrative has been driven by comments from major industry figures and company calls where ExxonMobil and other leaders said the full impact of the supply shock has not yet been priced into the market. Exxon’s management noted that while commercial inventories and strategic releases have so far tempered price moves, prolonged disruptions — particularly around the Strait of Hormuz — could push prices higher and sustain margins for low-cost producers. Devon has published sensitivity analyses showing a material boost to free cash flow yield as WTI rises from $90 to $110 per barrel, underscoring the leverage inherent in upstream operators.

For markets, this translates into heightened volatility in Brent and WTI futures and renewed attention on energy equities. Fuel price pressure passes through to transport and consumer costs, potentially feeding broader inflation readings. Investors seeking exposure to rising oil prices can access that exposure either through commodity contracts or via shares in producers; the latter route makes balance-sheet strength and cash-generation capacity key selection criteria.

In a wider context, regional geopolitical risk and disruptions to shipping corridors have prompted some forecasters to extend their normalization timelines into 2027, reflecting concerns over rebuilding global inventories and restoring pre-shock flows. Institutions and banks that model multi-year supply-demand balances note that a protracted recovery would favor producers with low marginal costs and significant U.S. onshore operations.

Analysts emphasize that while a scenario of higher-for-longer oil supports certain upstream names, the outlook is binary: a return to smoother flows or a demand slowdown would reverse the trade quickly. Devon and Diamondback represent leveraged plays to the price path, but investors should monitor WTI/Brent trends, company-specific production guidance and capital allocation decisions to manage timing risk.